This coming Monday’s Eurogroup meeting will include a discussion about tokenization, DLT and central bank money for wholesale settlement, as well as the status of the retail digital euro. The Eurogroup is an informal body of economic and finance ministers that meet to discuss issues relating to the euro currency.
Mr Hyun Song Shin, economic adviser and head of the monetary and economic department at the Bank for International Settlements (BIS) will take part in the discussion. He is involved in Project Agorá, the BIS project to combine tokenization and wholesale CBDC to speed up cross border payments using correspondent banking. It involves 41 institutions plus seven central banks, including the Banque de France as the EU representative.
During the recent Eurosystem wholesale DLT settlement trials that ended in November, the French central bank’s wholesale CBDC (wCBDC) or ‘exploratory cash tokens’ was one of three settlement solutions used for DLT-based transactions, but the only wCBDC. The Deutsche Bundesbank’s Trigger solution proved the most popular, perhaps reflecting the country’s more advanced development of tokenization given supporting laws. This year the Bundesbank has posted more ads to hire DLT staff.
Industry participants requested that some form of settlement tools remain available after the trials, in order to avoid losing momentum. In response, the ECB said it would discuss the lessons learned this month and explore next steps. According to the ECB, 64 institutions took part in over 40 trials (real money) and experiments (simulations), one of the largest tokenization initiatives in the world to date.
Innovation looms large on economic agenda
These specific innovation topics are not the only ones to be discussed. The meeting will cover European Commission recommendations for economic policy in the euro area. The Commission paper refers to the Euro area’s “stagnant productivity, limited innovation and limited diffusion of digital technologies.”
It continues, “developing capacities in strategic digital technologies and
exploiting our strengths are crucial to reinforcing EU technological sovereignty and
resilience and maintaining our open strategic autonomy.”
Hence, advancing wholesale DLT settlement options seems like a good place to start.
