Deutsche Bundesbank, Germany’s central bank, and Deutsche Börse, owner of the Frankfurt Stock Exchange, have completed trial for a blockchain settlement system.
According to the bank, the new system would investigate the technology’s potential in securities settlement.
The duo while speaking on Thursday, said, two blockchain prototypes built to their specifications had “successfully” supported the settlement of securities transactions, payments (including interest) and bond repayments at maturity.
However, in March 2016, the project was finally started when both parties launched BLOCKBASTER (for blockchain-based settlement technology research) project – aimed to create “a conceptual prototype” for blockchain-based system to transfer and settle securities and fiat currency.
The prototypes were developed on Hyperledger Fabric and the blockchain platform created by Digital Asset (DA), which is notably also working with the Australian Securities Exchange to replace its CHESS system in 2020.
More so, the tests showed that the prototypes are able to facilitate the “productive operation of a realistic financial market infrastructure.” Recent upgrades of both blockchain platforms could further improve performance if integrated, it adds.
“The tests have shown that blockchain technology is a suitable basis for applications in the field of settlement and other financial infrastructures,” said Berthold Kracke, CEO of Clearstream Banking and head of Clearstream Global Operations at Deutsche Börse Group.
Burkhard Balz, member of the executive board, Deutsche Bundesbank, noted that the firms expect the development to continue quickly, as they believe in “potential in using it for high-volume applications.”
According to him, “The approach of a permissioned architecture, which takes into account the requirements of the financial sector from the outset, has proven to be right.”
However, many firms are now beginning to appreciate blockchain technology as a means of improving payment and settlement systems.
It would be recalled that just yesterday, United Kingdom based settlement infrastructure provider SETL was granted a license from France’s securities regulator to operate a central securities depository system using blockchain technology.
The Singapore Stock Exchange, South Africa’s central bank and Bank of Canada are other firms showing keen interest in trying out possible blockchain technologists.