Today the European Central Bank (ECB) announced plans to “explore new technologies” for wholesale central bank money settlement. The brief announcement avoids any mention of a wholesale central bank digital currency (CBDC). Instead, it refers to linkages between DLT infrastructures and the TARGET real time gross settlement (RTGS) systems for settlement. This approach is often referred to as a trigger payment.
While the ECB is forging ahead with a retail digital euro, there has been significant demand from banks for a wholesale CBDC for use in on-chain settlement, especially for DLT-based securities transactions. An on-chain digital currency would enable seamless delivery versus payment (DvP) transactions, although it’s also possible with a trigger solution.
To date, the Banque de France has been actively exploring a wholesale CBDC and one was used for settling recent bond transactions. The French central bank is also planning further work this year.
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