Germany: Bridging the gap between blockchain and Euro
German Authorities are looking to connect blockchain and fiat currency through new tech which allows investors to buy and sell securities on blockchain for central bank money
Authorities in Germany are developing technology that allows investors to buy and sell securities on the blockchain and in exchange receive central bank money.
The main aim of this tech development is to bridge the gap between the two. Something that seemed a distant reality a few years ago.
Several institutions both public and private have been experimenting with a distributed ledger technology (DLT), known to be behind powering several cryptocurrencies including bitcoin, for finalising trades in official money.
Budesbank partnered with Deutsche Borse and the German Govt. debt agency for this new venture and stated on Wednesday that this new solution is the first of its kind, allowing people to sell securities on blockchain and receive their proceeds in their central bank account.
There is expectation that this newly found technology will be made available to the entire euro zone, before the European Central Bank’s digital euro is launched.
Bundesbank’s statement said:
“The participants have demonstrated that it is possible to establish a technological bridge between blockchain technology and conventional payment systems to settle securities in central bank money with no need to create central bank digital currency,”
The pilot programme
During testing stage, six banks – Barcalys, Citibank, Commerzbank, DZ Bank, Goldman Sachs and Societe Generale traded an issued a 10 year government bond on the blockchain.
The trade was finalised through the help of a ‘trigger chain’ on the blockchain which connects the assets on the DLT with the euro zone’s payment system called Target 2.
Could this be the start of digital currencies in our everyday life? Will crypto fans welcome central banks getting involved in the industry?
Source: Reuters
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