Germany’s federal bank Deutsche Bundesbank has successfully tested a blockchain-based settlement interface for electronic securities. The test bridges the gap between mainstream finance and blockchain technology without relying on a central bank digital currency (CBDC). Developed in partnership with Deutsche Börse Group and the German Finance Agency, the test demonstrates that the platform relies on two software modules that connect the existing payment system with digital ledger technology. Several central banks are currently testing CBDCs in a different capacity.
The test issued a 10- year government bond using DLT.
The test issued a 10- year government bond using DLT and trading in primary and secondary markets settled in the same system to demonstrate the technology. The test then developed a ‘trigger signal’ that connected the DLT with the current payment system, confirming a transaction had taken place. The test allowed the Bundesbank to benefit from blockchain technology’s strength without the need to overhaul their currency. Germany’s economy is the largest in the Eurozone. Therefore, it is of high significance that the federal bank has been among strong opponents of CBDCs.
“The new technology could be more rapidly adopted in the Eurozone.”
German politician and Bundesbank board member Burkhard Balz said the new technology could be more rapidly adopted in the Eurozone than CBDC proposals. “Following successful testing, the Eurosystem should be able to implement such a solution in a relatively short space of time — at least in far less time than it would take to issue central bank digital currency, for instance,” he said. The project involved a number of participants, including Citibank, Barclays, Goldman Sachs, Commerzbank, DZ Bank, and Société Générale. Deutsche Bundesbank shared a video demonstrating how digital transactions can be settled in safe and stable central bank money by using the existing infrastructure with DLT.
#DLT-based securities settlement in #centralbankmoney successfully tested by @DeutscheBoerse, Bundesbank and Germany’s Finance Agency https://t.co/pgxC7GjiPc #DistributedLedger #cashmanagement pic.twitter.com/UMpekdNY9g
— Deutsche Bundesbank (@bundesbank) March 24, 2021