The German Central Bank, the Deutsche Bundesbank, and securities marketplace organizer Deutsche Boerse (DB) have recorded success in the blockchain settlement trial. This is according to a report by DB on Thursday, October 25. The report noted that the trial of blockchain based settlement technology research otherwise known as Blockbaster commenced in 2016.
The Joint Research
This joint research was majorly centered on conducting a full lifecycle of bond issuance, settlement, corporate actions, and redemption, as well as cash transfer including the provisioning of digital coins, and settlement of cash payments, transfer between market participants, the summary states on the blockchain.
Hyperledger Fabric framework and Digital Asset, a distributed ledger (DLT) was used to test the transaction volume and speed of a production system. The report further stated that some test had been rendered obsolete owing to the frequent upgrade made to the basic technologies used during the trial.
According to the reports of the trial, the pros and cons of the blockchain technology were identified. Some of the notable weaknesses were the high latency for some technology stacks and high CPU-usage, some of the benefits of the platform seem to be higher resiliency and lower cost of reconciliation owing to the shared database.
Decentralized Solutions to Meet Market Needs
After a successful trial, the central bank of Germany and Deutsche Bundesbank reached a consensus that the decentralized solutions be integrated to suit the financial market thereby addressing the growing need. They admitted that the blockchain or DLT-based solutions had been able up their game with more developed specialized software to suit specific use cases.
The executive board member of German central bank Burkhard Balz said in the report that the Blockbaster trial was a huge success pointing out that he envisaged “rapid development to continue,” he went ahead that the saw “potential in using it for high-volume applications.”
“The approach of a permissioned architecture, which takes into account the requirements of the financial sector from the outset, has proven to be right.”
It was previously reported that Setl, a United Kingdom firm, had received a permit from the securities’ watchdog in France to go on with a blockchain-powered central securities depository. With this achievement, there is a strong likelihood that the UK startup would link up with the Target2-Securities platform which is currently a €1 billion pan-European network for securities settlement run by the European central bank and targeted at achieving a seamless and speedy cross-border funds transfer.