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Germany’s Central Bank and Deutsche Borse’s Blockchain Project on Trial


Though the crypto market has been struggling for this year mainly because of regulatory changes, it is important to note that adoption is slowly happening. Even ICE has teamed up with Microsoft to bring Bakkt.

These days, there are banks that are now dealing with cryptocurrencies to reduce the cost of cross-border transactions. In addition to this, there are already institutional investors that are slowly participating in the market. And for some experts, this is seen as good news that could trigger another bull-run.

These days, it isn’t surprising to see banks to explore the possibilities of blockchain. German central bank Deutsche Budesbank and Deutsche Borse both announced that they have completed the two prototype blockchain-based securities settlement systems. These systems will then be up for performance test. It was revealed in the announcement that the prototype systems will support the settlement of regular payments as well as securities transactions and repayment when bonds have achieved maturity. Also, the systems were developed using the Hyperledger Fabric version 1.0 and the Digital Asset Platform.

For Institutional Investors?

According to their statement, both banks mentioned that the prototypes need to be “subjected to demanding performance tests”. Here, it becomes possible to establish if it can be used for practical applications. According to the tests, the prototypes can handle transaction load given the existing financial market infrastructure. In addition to this, it can even be improved in the future. It was mentioned in the statement that Hyperledger Fabric and the Digital Asset Platform can both be used to improve the performance of the prototypes.

According to Burkhard Balz who is a member of the Executive Board of Deutsche Budesbank: “During this project, Deutsche Budesbank and Deutsche Borse learned a lot about the usage of this technology and its concrete implementation. We expect the rapid development to continue, and also see the potential in using it for high-volume applications. The approach of a permissioned architecture, which takes into account the requirement of the financial sector from the outset, has proven to be right”.

As for Berthold Kracke who is the CEO of Clearstream Banking Ag and Head of Clearstream Global Operations at Deutsche Borse Group, “We are very happy with the result of the project. The tests have shown that blockchain technology is suitable basis for application in the field of settlement and other financial infrastructures. Thanks to the cooperation with Deutsche Budesbank and the expertise of Digital Asset, we were able to tailor the product to the needs of the industry”.

As early as February 2017, it has been reported that Deutsche Budesbank was already working on a blockchain-based settlement system but wasn’t market ready during that time. But with the latest development, it is possible that the blockchain settlement system is already going to be made available soon. It is a culmination of nearly two years of work.

More Banks to Join?

Does it mean that banks are now seeing the benefits of blockchain technology? There are banks that are even meddling with cryptocurrencies such as Santander that is testing the xRapid product by Ripple. This development in the niche can be considered a good thing in helping the popularity of the technology.

Lee Jenkins

Lee is our resident cryptocurrency expert who knows the ins and outs of each coin and the blockchain technology behind them. You’ll find that most of our technical guides are written or overseen by Lee and they are all easily digestible by the new and experienced alike, so there is no better place to learn blockchain 101 than here. Occasionally you may see a news article from him if it’s tech related!