The German Bundesbank, the Deutsche Bundesbank, has successfully tested a project that combines traditional financial infrastructure with blockchain technology.
Despite the current global rush by central banks to familiarize themselves with the central bank’s digital currency technology, the tests carried out by the Bundesbank in collaboration with Deutsche Börse and the Deutsche Finanzagentur did not require the issuance of any CB or token money at all.
The system reportedly relies on two software modules that create a link between the Bundesbank’s internal system and the distributed ledger technology. Instead of creating a token-based system, the bank simply created an interface that triggers a “trigger” indicating that a transaction has been processed and that money can safely change hands.
Germany has made no secret of the fact that it is not particularly interested in a CBDC. This may be because the Bundesbank, due to its position as the most powerful member of the European System of Central Banks, is the organization with the greatest influence on losses. This is a feeling that the German politician Burkhard Balz himself confirmed in 2020.
Following the announcement of the Bundesbank’s latest tests, Balz, who is also a member of the Bundesbank, suggested that the entire Eurosystem could adopt the technology much faster than a CBDC.
“After successful tests, the Eurosystem should be able to implement such a solution in a relatively short time – at least in a much shorter time than, for example, for issuing the digital currency of the central bank,” said Balz.
As part of the tests, the German Finance Agency issued a 10-year federal bond via the DLT trigger system and at the same time tested securities trading on primary and secondary markets. Participants from Citibank, Barclays, Goldman Sachs, Commerzbank, DZ Bank and Société Générale took part in the tests.