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:
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.
Image via YouTube
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.