Starting May 13, 2024, the Eurosystem, in collaboration with financial institutions and central banks, will commence exploratory efforts to adopt new technologies for settling wholesale transactions in central bank money.
The ECB’s Governing Council has greenlit the participation of ten market entities with access to TARGET and six distributed ledger technology (DLT) operators. These participants are keen on engaging in trials involving actual settlement in central bank money and simulations of settlement in a controlled environment.
Leading central banks from the euro area, including Banque centrale du Luxembourg, Banque de France, Banca d’Italia, Deutsche Bundesbank, and Oesterreichische Nationalbank, will actively partake in the initial phase of this exploratory venture.
The participating market entities and DLT operators have put forth various business cases focusing on wholesale transactions conducted on DLT platforms with settlements in central bank money. These cases primarily revolve around securities settlement processes such as delivery-versus-payment, secondary market transactions, and securities lifecycle management, including coupon payments. Additionally, there are considerations for cross-border payment scenarios, particularly payment-versus-payment setups.
While the first wave of participants has been finalized, the call for expressions of interest to join a second wave of trials and experiments from July to November 2024 will remain open until April 30, 2024.
Key Points:
- Eurosystem embarks on exploratory work for wholesale transaction settlement technologies.
- Collaboration between financial firms, central banks begins on May 13, 2024.
- ECB’s Governing Council approves participation of ten market entities and six DLT operators.
- Central banks from the euro area, including Banque centrale du Luxembourg, Banque de France, Banca d’Italia, Deutsche Bundesbank, and Oesterreichische Nationalbank, join the initiative.
- Participants propose business cases focusing on securities settlement processes and cross-border payments.
- First wave of participants finalized; call for expressions of interest for second wave open until April 30, 2024.
References
https://www.ecb.europa.eu/press/intro/news/html/ecb.mipnews240403.en.html