The European Central Bank (ECB) will begin exploratory work for financial market settlements based on distributed ledger technology (DLT) from 2024, according to meeting minutes published on June 29.
While the ECB explores how it can innovate the settlement of securities and foreign exchange transactions between financial institutions, it is also developing plans for a retail central bank digital currency (CBDC), a digital euro, available to EU citizens. .
“The ECB is expected to begin study work in 2024,” according to the minutes, which will test the digital euro in both real and simulated wholesale trading.
The investigation builds on existing rules, including new pilot regulations passed by the EU last year, which temporarily relax financial market infrastructure requirements for securities trading using DLT, “because of capacity and time constraints.” It will take place, the minutes add.
The announcement came at the first meeting of a new trade group set up by the ECB last week as traditional financial players continue their exploration of cryptocurrencies and the blockchain technology that underpins them. The ECB’s advisory board is dominated by traditional financial players such as Euroclear and Deutsche Bank, but also includes DLT-focused initiatives such as HQLAX and Fnality.
The European Commission on June 28 proposed new legislation that could underpin retail CBDCs, including holding limits for consumer privacy and to prevent deposits from leaving the banking system.
A recent study by industry group Global Financial Markets Association found that using crypto-style DLT in financial markets could generate $100 billion annually by releasing collateral and automating processes such as mergers. 400 billion yen).
｜Translation: coindesk JAPAN
｜Editing: Toshihiko Inoue
｜Original: ECB to Start Wholesale CBDC Settlement Trials in 2024