Bundesbank tests CBDC-independent blockchain solution for settlements

Blockchain and traditional payment systems are compatible in settlements of electronic securities. This confirmed by experiments conducted by the Bundesbank, BaFin and Deutsche Börse.

The results showed that such systems can operate without national CBDCs. Previously, the prevailing view held that CBDCs were necessary for both asset tokenisation and monetary transactions.

During the trial, specialists issued ten-year government bonds based on DLT technology. In the same system, they settled primary and secondary market transactions.

The next step connected the DLT platform to the pan-European interbank payment system TARGET2, creating a corresponding interface. As a result, after the settlements were confirmed in the blockchain system, funds were transferred to TARGET2.

The “delivery versus payment” settlement method minimizes counterparty risk for both buyer and seller, researchers said. In their view, the solution can be scaled faster than issuing a CBDC.

Barclays, Citibank, Commerzbank, DZ Bank, Goldman Sachs and Société Générale took part in the project.

The test results could complicate the rollout of the digital euro, about which the Bundesbank has not expressed enthusiasm, CoinDesk reports.

Earlier, the German government approved a bill that makes fully electronic securities legal within the framework of a broader blockchain strategy.

In December, the Bank for International Settlements, with the participation of the Swiss National Bank and SIX Swiss Exchange, tested the integration of the DLT platform with the existing wholesale payment system.

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