Germany’s Central Bank, Deutsche Boerse Complete Tests For Blockchain Settlement Prototypes

Blockchain, News | October 26, 2018 By:

Deutsche Bundesbank, the central bank of Germany, and Deutsche Boerse, the operator of the Frankfurt Stock Exchange, have successfully completed their blockchain trial on securities settlement.

In March 2016, the two entities partnered to undertake blockchain based settlement technology research in order to improve back-office services for the bank and the stock exchange. Called Blockbaster, the project’s aim was to create a conceptual prototypes for a blockchain-based transfer and settlement of securities and cash. The prototypes was intended to function as a sandbox for testing blockchain-based securities settlement, including the full lifecycle of bond issuance, settlement, corporate actions, redemption, as well as cash transfer including provisioning of digital coins, transfer between market participants and settlement of cash payments.

In a joint press release published on Thursday, the two entities announced that two blockchain prototypes had “successfully” supported the settlement of securities transactions, payments, interest payments and repayments at the maturity of a bond. The prototypes were developed on Hyperledger Fabric and the blockchain platform created by Digital Asset (DA).

The prototype based on DA’s blockchain platform was extensively tested in 30 scenarios and achieved the defined criteria for success. According to the release, the defined benchmarks based on realistic market volumes did not put a significant amount of load on the DA Platform. The DA solution prototype also was able to support predictable scaling behavior, with the potential for further optimization of performance in a production environment.

The Hyperledger Fabric-based prototype reportedly fulfilled all basic regulatory features for financial transactions: no anonymity (KYC), confidentiality of transfers (need-to-know principle), participation of admitted peers only (permissioned network).

“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 entities said. “Both the Digital Asset Platform and the Hyperledger Fabric have had subsequent releases which may even improve the performance.”

Burkhard Balz, Member of the Executive Board of Deutsche Bundesbank, said that during this project, Deutsche Bundesbank and Deutsche Börse 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,” Balz said. “The approach of a permissioned architecture, which takes into account the requirements of the financial sector from the outset, has proven to be right.”

Berthold Kracke, CEO of Clearstream Banking AG and Head of Clearstream Global Operations at Deutsche Börse Group, said that the tests have shown that blockchain technology is a suitable basis for applications in the field of settlement and other financial infrastructures.

“Thanks to the cooperation with Deutsche Bundesbank and the expertise of Digital Asset, we were able to tailor the product to the needs of the industry,” Kracke said.