The Deutsche Bundesbank has managed to successfully test a blockchain-based settlement interface for electronic securities. This test means that the gap between mainstream finance and blockchain technology has been bridged even without having to use a CBDC.
The test was created in partnership with Deutsche Börse Group and the German Finance Agency, and it showed that the platform uses two software modules that connect the existing payment system with digital ledger technology (DLT).
In order for the technology to be demonstrated, the test issued a 10-year government bond by using DLT along with trading in primary and secondary markets settled in the same system, according to CoinGeek.com.
Following this, the test developed a “trigger signal” that made a connection between the DLT with the current payment system, which was the confirmation that the transaction had taken place.
Next, the platform allowed Bundesbank to benefit from the power of blockchain technology without having to overhaul their currency. The German economy is the largest in the Eurozone, which means it is highly important that the Bundesbank has been among the biggest opponents of a CBDC.
Digital currencies have become more and more popular, which, in turn, made the mainstream pay attention to them, to blockchain technology, and to all the possibilities out there. More and more, people are using the term blockchain as a generic one that is associated with Bitcoin, the first digital currency that was created using this technology.
The scope and potential of the application of decentralized protocols are thus far much broader than ever before.
Burkhard Balz, a German politician and Bundesbank board member, has expressed a similar feeling, commenting that the new technology may be faster adopted in the Eurozone than CBDCs.
“Following successful testing, the Eurosystem should be able to implement such a solution in a relatively short space of time — at least in far less time than it would take to issue central bank digital currency, for instance.”
An important number of big names took part in the project, such as Société Générale, Citibank, Goldman Sachs, DZ Bank, Barclays, and Commerzbank.
Deutsche Bundesbank has also shared a video via Twitter that shows how digital transactions can be settled in safe and stable central bank money by relying only on the existing infrastructure with DLT.