(BlockBar) The president of the Deutsche Bundesbank, Jens Weidmann said a blockchain trial project used for the transfer and settlement of securities and cash proved slower and more costly than the current traditional methods. The Deutsche Bundesbank is the central bank of Germany.
The president of the central bank said: “The blockchain solutions did not fare better in every way: the process took a bit longer and resulted in relatively high computational costs.”
The pilot project was launched in partnership with Deutsche Börse AG, Germany’s stock exchange and its headquarters being in Frankfurt. The pilot started in 2016 and came to an end in late 2018. Although the pilot disappointed on cost-effectiveness and speed, it managed “fulfilling all basic regulatory features for financial transactions.”
Although banking executives have previously slammed cryptocurrencies but gave blockchain technology a vote of confidence. Unfortunately, the outcome of the pilot is a contradiction to the claims of blockchain maximalists who say that the technology is cheaper, faster, and more secure than most technologies currently in use.
However, there is an increase in the number of central banks exploring the use of blockchain technology. According to Yves Merch, an executive board member of the European Central Bank (ECB), it is important to separate crypto assets such as Bitcoin and the technology that underpins them.
He said that the role of central banks 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.”
It is worth noting that banks have not been the first industry to embrace blockchain technology, but more and more of them are opting for it recently. JP Morgan Chase, one of the biggest banks in the US, has announced that it is developing its own in-house stablecoin designed for its corporate clients.
It is not just the banks but some of the world’s biggest companies are exploring their own blockchain efforts despite the technology’s infancy. Facebook is working on its cryptocurrency project and so are Telegram and other messenger app based companies. This could potentially expose millions to blockchain technology and crypto assets.