Deutsche Börse goes blockchain for cash transfers
Deutsche Börse has developed a concept for the “riskless” transfer of commercial bank money via an infrastructure based on distributed ledger technology (DLT)/blockchain.
By combining blockchain with its post-trade infrastructure, Deutsche Börse says the same as everyone else – such as it will “achieve efficiencies” and will investigate “possible new business opportunities”.
Via collateralisation at Deutsche Börse’s central counter party (CCP), Eurex Clearing, “credit risk inherent in tokenised coins can be mitigated”. As Eurex Clearing interfaces with the group’s central securities depository Clearstream, the new concept “might also offer the potential for efficiency gains in post-trade processes like settlement and asset servicing”.
Carsten Kengeter, CEO of Deutsche Börse, says: “With this pilot, we are adding another pioneering element in the area of payments and value transfer to the debate around blockchain.”
The concept is based on a collateralised coin, “CollCo”. All peer-to-peer payments based on tokenised commercial bank money are accompanied by movements of collateral between the respective Eurex Clearing members using the CCP’s functionality and rules.
Deutsche Börse says CollCo addresses existing and potential new use cases. These include the handling of margining requirements, credit risk free payments, and delivery-versus-payment asset/value transfer on the blockchain.
As a next step, Deutsche Börse says it will consult with clients, regulators and central banks to obtain feedback on its concept. A functional and technical prototype based on Hyperledger Fabric is currently being developed, and a patent application has been filed.
This latest development follows on from Deutsche Bundesbank and Deutsche Börse unveiling a blockchain prototype last year.
Other recent activities include building a blockchain solution for cross-border collateral transfer in co-operation with the “Liquidity Alliance”.
Deutsche Börse also takes part in Linux Foundation’s Hyperledger Project, where it has become a “premium member”.
It has also taken a minority stake with a board seat in Digital Asset Holdings, a New York-based company developing blockchain software for financial intermediaries.