As part of a recent Deutsche Börse paper on the European capital markets union, the company called for a permanent wholesale CBDC (wCBDC). This follows a series of wholesale DLT settlement trials that ended last November. Twice during the last couple of weeks, ECB Director Piero Cipollone has stated that a short term solution for central bank money settlement for DLT will be put into place soon. During a recent Banque de France event, he said the central bank is working on setting this up in months, not years.
There’s a twofold driver behind the relatively urgent need. On the one hand, if on-chain cash is not available, institutions will start using other alternatives such as tokenized deposits or stablecoins to settle DLT securities transactions. Central bank money is usually used for wholesale securities settlement to minimize risk, so alternatives increase risks.
The second driver is market demand. Institutions believe a wholesale CBDC or (as a fallback) some DLT friendly central bank settlement solution is needed to encourage DLT adoption. The recent trials involved both a wholesale CBDC and two other solutions that interoperate with existing central bank payment systems. Hence, the short term solution may or may not be a wCBDC. As the trial drew to a close in November, companies asked for continuity in order to avoid losing momentum. That included someone from Clearstream, which is part of the Deutsche Börse Group.
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