The Eurosystem is currently running a series of trials exploring different mechanisms to settle DLT-based securities transactions using central bank money. In the latest trial, Germany’s Sparkasse Dortmund issued a digital savings bank bond on the SWIAT blockchain. The transaction was settled by using the German Bundesbank’s Trigger solution, which links to the TARGET2 payment system.
Helaba was the paying agent for the issuer, with DekaBank as the investor. DekaBank also acted as registrar for the registered bond and DLT operator. The bank is the founder of the SWIAT DLT platform, but it is now a joint venture that includes Standard Chartered and LBBW as partners. SWIAT says it has 24 institutional participants.
Sparkasse Dortmund joined the platform to issue digital savings bank bonds alongside two other savings banks last year. Since then SWIAT has attracted other savings banks, including Sparkasse Niederbayern-Mitte.
The Trigger solution is proving popular
The Trigger solution is one of three settlement options in the wholesale DLT settlement trials. The others are a wholesale CBDC using the Banque de France’s DL3S platform and the Bank of Italy’s TIPS Hashlink solution.
Regarding trials using real central bank money, so far the Trigger solution has been used by the most projects. That might be because Germany has favorable electronic securities issuance laws, the eWpG. As a result, German institutions are more active in the sector. However, multiple German bankers have told Ledger Insights they’d prefer a wholesale CBDC.
SWIAT has been a major contributor to the Trigger solution activity.
Its first Trigger settlement was for a DekaBank issuance of crypto security without intermediaries. BayernLB issued a digital registered bond, followed by LBBW’s Berlin Hyp issuing a €100m digital mortgage bond. Last month Siemens issued a €300m corporate bond, five times the amount of its previous digital bond.
The ECB / Eurosystem trials continue through to next month.
