- The pilot for two prototypes for blockchain-based settlements completed successfully
- The project aim was to create a conceptual prototype for transfer and settlement of both securities and cash
- They noted some small weaknesses which they will improve with the recent upgrades
Germany’s central bank Detusche Bundesbank and the Deutsche Börse have successfully finished a trial run for a blockchain-based solution for securities settlement. The project’s goal was to test the usefulness of the blockchain technology in enhancing back office services for the two institutions.
The two institutions made a joint press release on Thursday, October 25, 2018, to say they had successfully concluded a pilot for two prototypes for blockchain-based settlements. Both companies used blockchain prototypes that were tailor-made and at the end of the test period, the prototypes supported settlements involving securities transactions, payments, and bond repayments at maturity. The statement read in part:
“The tests showed that both prototypes are suitable for the productive operation of a realistic financial market infrastructure and can serve as a basis for further development.”
The aim of the project was to create a conceptual prototype for a blockchain-based transfer and settlement of both securities and cash. The partnership selected two “technology stacks” that represented market conditions. Commenting on the development, Deutsche Börse Group Clearstream Banking CEO and Clearstream Global Operations head Berthold Kracke stated:
“We are very happy with the results of the project. The tests have shown that blockchain technology is a suitable basis for applications in the field of settlement and other financial infrastructures.”
Some improvements to be made
The successful testing of the blockchain-based prototypes is good news considering the results are long overdue. They launched the original project in March 2016 when the pair unveiled the “BLOCKBASTER project.” Their aim was to create a “conceptual prototype” that would enable a blockchain-based system that could enable the transfer and settlement using fiat currencies and securities.
During the project, the prototypes used the Hyperledger Fabric (version 1.0) platform to work upon and integrated them on a blockchain platform created by Digital Asset (DA), which is the system that was used for the Australian Securities Exchange, working to broaden their network beyond the CHESS system by 2020.
The statement by the twosome showed that the prototypes facilitated a “productive operation of a realistic financial market infrastructure.” The report noted also that they noted some small weaknesses such as the huge amount of power CPUs required to support the prototypes. Thankfully, they were positive that with the recent upgrades in the platforms, the performance is expected to improve. A member of Deutsche Bundesbank’s executive board, Burkhard Balz, commented:
“The approach of a permissioned architecture, which takes into account the requirements of the financial sector from the outset, has proven to be right.”