Weidman, President Of German Central Bank: “Blockchain Settlement Was Slow, Costly In Trial”
Weidman – President Of German Central Bank: “Blockchain Settlement Was Slow, Costly In Trial”
According to the president of Germany's Central Bank – Jan Weidman – the recent performance of a trial project which made use of blockchain technology in order to provide an alternative transfer and settlement solution for securities and cash demonstrated that not all blockchain concepts are rapid challengers to centralized systems.
The experiment itself, which was a collaborative effort between Germany's central bank – the Bundesbank – and Deutsche Boerse, beginning in 2016, officially concluded in the final quarter of 2018, with the prototype “in principle fulfilled all basic regulatory features for financial transactions.”
But while serious advocates for blockchain technology would argue that this showcases just some of the potential that blockchain has for providing a better solution for already existing settlement solutions, while providing faster and cheaper mechanics. For Weidmann, however, argued that the project didn't prove up to the banks expectations.
“The blockchain solutions did not fare better in every way: the process took a bit longer and resulted in relatively high computational costs,” Weidmann explained during an interview in Frankfurt last week. “Similar experiences have been made elsewhere in the financial sector. Despite numerous tests of blockchain-based prototypes, a real breakthrough in application is missing so far.”
There have been a rising number of global and centralized banks that have since begun to delve into the world of distributed ledger technology and how to apply it for their financial systems. According to one of the Executive Board Members for the European Central Bank, Yves Mersch, it proved to be an important effort from their part to draw clear lines of distinction between virtual assets, as we commonly know Bitcoin as, and the underlying technology which makes them possible.
“Some of the technology is worth exploring and could also be of interest to central banks,” Mersch went on to explain. “That said, our role is not to drive technological adoption by the industry and the general public, but to ensure that changing preferences can be satisfied in a secure way.”