A project to test a blockchain based settlement system in Germany has been successfully completed. The experiment known as “blockchain based technology transfer research” or simply BLOCKBASTER started in March 2016 and was jointly being undertaken by Group Deutsche Börse and Deutsche Bundesbank, Germany’s central bank.
Recently released results indicate the system which was meant for back-office operations can support common operations including interest payments, securities transactions as well as the repayment of bonds on maturity.
“The aim of the Blockbaster project was to evaluate Distributed Ledger and in particular blockchain technology as a basis for payments and securities settlement,” a final report on the project says.
The permissioned blockchain ran on an earlier version of HyperLedger Fabric. “All functions performed well, running on a PC using a graphical interface where different participants could log in using their credentials.”
Know-your-customer requirements and other requirements were met according to the study.
On average, it took 35 minutes to complete intended transactions. Some transaction conflicts were identified although these were down to the use of an earlier version of HyperLedger Fabric. Tests with more recent versions, however, solved the problem.
Overall, the two organizations found that the system could improve payment and settlement systems. Being operators of financial market infrastructures, Börse Group and the Deutsche Bundesbank were interested in boosting safety and efficiency of their services.
They also note that distributed ledger technologies have tremendously improved in terms of scalability and therefore good candidates for production systems.
It will, however, require the cooperation in the larger financial system to reap some of these benefits, the study notes.
“We expect the rapid development to continue, and also see the potential in using it for high-volume applications. The approach of a permissioned architecture, which takes into account the requirements of the financial sector from the outset, has proven to be right,” Burkhard Balz, Member of the Executive Board of Deutsche Bundesbank said in a press release.