The Eurosystem is moving forward with experiments on the use of new technologies for settling wholesale transactions using central bank money.
Experiments will take place over the next six months using the Eurosystem’s three interoperability-type solutions. This will include settlements on distributed ledger technology (DLT) platforms.
The first experiment was completed on 13 May, carried out by the Oesterreichische Nationalbank. The experiment covered the tokenization and simulated delivery-versus-payment (DvP) settlement of government bonds in a secondary market transaction against central bank money.
A total of 16 companies are participating in the experiments, six DLT operators are alongside 10 market participants. One company, Landesbank Baden-Württemberga, is involved as both a market participant and a DLT operator.
The participation of the 16 companies was confirmed by the European Central Bank (ECB) back in April. One of the firm’s involved, Clearstream, stated at the time that its participation in the experiments is “a significant milestone in our digitisation journey”.
DLT has become an area of heightened interest for many European payments’ stakeholders, as well as those outside the EU. In an interview with Payment Expert last month, NatWest’s Head of Group Payments Strategy and Research, Lee McNabb, pointed to the potential of DLT, but noted that its full impact will likely not be felt for at least a few years.
Meanwhile, the experiments also show a continuing desire by the ECB to engage with and effectively utilise new technologies. The EU’s Central Bank has been particularly keen on the prospect of a Central Bank Digital Currency (CBDC), making its case to the European Parliament to push development of a digital euro forward.