Blockchain for Banking News

Wholesale digital euro, DLT settlement trials take shape

digital euro cbdc

In mid October the European Central Bank (ECB) held another industry contact group meeting about its planned digital euro trials of wholesale settlement for DLT networks, including a wholesale digital euro. It shared the themes it wants to explore and the phases of the pilots.

As previously outlined, the wholesale trials will test three interoperability solutions for delivery versus payment (DvP) to settle DLT securities transactions. One is a wholesale CBDC  from the Banque de France. Another is Italy’s escrow solution that links to the conventional TARGET-2 system. And the third is Germany’s trigger solution that also links to TARGET-2.

In its exploration of the themes, the ECB and Eurosystem already have several questions. For example, they want to establish whether there’s a business case for instant settlement. Or whether the industry is more interested in atomic settlement. From what we’ve heard, atomicity is highly desirable. It’s the ability to specify precise timing that enables greater control over cash. Often it might not be instant, but sometimes it might.

Additionally, the ECB wants to know whether there’s an appetite for 24/7 wholesale payments. Another query is whether banks want to connect directly to the interoperability solution or do so via the market DLT platform.

Nine themes for investigation

The meeting presentation split the themes into two groups.

Themes investigated directly via trials and experiments:

  1. Settlement performance and efficiency
  2. Reliability and safety
  3. Information management
  4. Automation features
  5. Integration of interoperability solutions with new environments (market DLTs)
  6. Energy consumption

Themes investigated with in-depth research:

  1. Integration of interoperability-type solutions with existing environments (TARGET Services)
  2. Liquidity management and settlement finality
  3. Preliminary and qualitative cost analysis

Meanwhile, the trial’s phases involve initially testing the functionality of the three interoperability solutions. Then there will be an end-to-end rehearsal. For the Italian and German solutions, this will link to the trial TARGET-2 system. And finally, they plan tests using real money and the production TARGET-2 system.

Last week the New Technologies for Wholesale settlement Contact Group (NTW-CG) held another meeting, but the outcome has not yet been shared. 

During October the ECB ran a survey which was a pre-call to organizations that want to participate in the trials.

Previous NTW-CG meetings: 123

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