The German central bank, Deutsche Bundesbank, has developed a functional prototype for the blockchain-based settlement of securities in collaboration with the largest German stock exchange, Deutsche Börse.
They explain that the prototype is designed to provide the technical functionality for the settlement of securities in delivery-versus-payment mode for centrally-issued digital coins, as well as the pure transfer of either digital coins or digital securities alone. In addition, it is capable of settling basic corporate actions such as coupon payments on securities and the redemption of maturing securities.
“With the blockchain prototype, the Deutsche Bundesbank and Deutsche Börse want to work together to find out whether this technology can be used for financial transactions, and if so, how this can be achieved. The Deutsche Bundesbank hopes that this prototype will contribute to a better practical understanding of blockchain technology in order to assess its potential,” explained Carl-Ludwig Thiele, Member of the Deutsche Bundesbank’s Executive Board.
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“Along with the Deutsche Bundesbank we are innovatively and creatively addressing potentially radical technological opportunities for the financial sector. We will continue to do our utmost to leverage blockchain’s efficiency potential and to better understand and minimise the associated risks of this technology,” added Carsten Kengeter, CEO of Deutsche Börse AG.
The developers say the blockchain prototype has, among other features, general observance of existing regulatory requirements, identification of potential to simplify reconciliation processes and regulatory reporting, and an implementation of a concept based on a blockchain from the Hyperledger project.