For the last six months the European Central Bank (ECB) has been orchestrating wholesale DLT settlement trials using central bank money. More than 70 institutions have taken part, with three different payment options available. Today three of the most active participants – Deutsche Börse’s Clearstream, DekaBank and Union Investment – shared their lessons as part of a Frankfurt School Blockchain Center event.
One of the three payment options was the Bundesbank’s Trigger solution, which has its own blockchain that triggers a payment on the Target2 payment system. The Banque de France has its DL3S blockchain that tokenizes central bank cash as a pilot wholesale CBDC. And the Bank of Italy provided its TIPS Hashlink solution, a lightweight escrow smart contract for the TIPS payment system which requires little infrastructure investment.
All the participants were extremely positive about the trials and keen to see them continue. The combination of tokenization and central bank money can cut costs, reduce risks and yield efficiencies. Several times they mentioned the potential for a digital capital markets union, as recently discussed by ECB Director Piero Cipollone.
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