European Central Bank trial to explore DLT for wholesale transactions

  • The European Central Bank (ECB) has initiated an exploration into the potential application of distributed ledger technology (DLT) for settling wholesale transactions involving central bank money.
  • DLT, serving as the underlying technological framework, enables simultaneous access, validation, and updating of records across a networked database, forming the cornerstone of this endeavor.
  • In the initial phase of testing, a consortium of 10 market participants, six DLT operators, and five central banks will engage in simulated settlement operations and conduct live transactions using central bank currency.

The European Central Bank (ECB) has assembled a diverse group of participants to explore the potential of distributed ledger technology (DLT) for settling wholesale transactions in central bank money.

ECB initiates trial of DLT

DLT, which comprises the technological infrastructure and protocols enabling simultaneous access, validation, and updating of records across a networked database, forms the backbone of this initiative.

In the initial testing phase, 10 market participants, six DLT operators, and five central banks will engage in simulated settlement operations and conduct real transactions using central bank currency.

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Clearstream, a division of Deutsche Börse‘s post-trade business, is enhancing its digital post-trade platform with DLT capabilities as part of this collaborative effort.

Jens Hachmeister, head of issuer services and new digital markets at Clearstream, sees the involvement in ECB trials as a milestone in their digitisation journey, stating, “We are thrilled to further collectively shape the future of an inter-connected digital European settlement landscape together with the ECB and our broad participant base.”

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Trial targets securities settlement

The trial’s focus lies on examining the securities settlement cycle, which includes delivery-versus-payment, secondary market transactions, and securities lifecycle management.

Additionally, the trial considers various cross-border payment mechanisms, including payment-versus-payment.

Sylvia-Shen

Sylvia Shen

Sylvia Shen, a news reporter at BTW media dedicated in Fintech and Blockchain. She graduated from University of California, Davis. Send tips to s.shen@btw.media.

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