For Germany's central bank, blockchain has proven to be a promising – if somewhat complicated – technology.
In late November, the Deutsche Bundesbank announced that it was working with exchange operator Deutsche Börse on a securities trading trial, using blockchain as a means of exchanging digitized securities, while also creating a record of those transactions. At the time, the central bank described the test as "purely a conceptual study".
New comments from Bundesbank executive board member Carl-Ludwig Thiele have shone a light on some of the results from that test. Thiele was speaking during a G20 conference on financial technology and innovation, an event that has seen other central bank figures, including Bundesbank president Jens Weidmann and Bank of England chief Mark Carney, remark on the tech.
While both Weidmann and Carney spoke largely in broad strokes, it was Thiele who dove a bit deeper into some of the work the Bundesbank has been undertaking on the blockchain front.
According to Thiele, the system "works" – but will require some refinement if it's ever to reach a point of commercial scale, describing it as "far from being market-ready".
He told attendees:
"Our conceptual study shows that blockchain technology can be adapted to meet the current needs and requirements of the financial system. The prototype works. Having said that, its further development for mass use is still presenting many challenges."
As for those challenges, Thiele questioned whether the prototype, in its current form, could be used on a wider scale or whether it would be worth its cost in the long-run.
That said, Thiele indicated that the Bundesbank would continue to refine the prototype and gather data.
"With this as our starting point, we aim to develop a technically more sophisticated prototype, capable of providing information on technical performance and thus allowing comparison with our present settlement infrastructure," he concluded.
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