Yesterday, the Oesterreichische Nationalbank participated in the first trial of wholesale DLT settlement transactions as part of the Eurosystem experiments. As reported last month, 16 institutions were onboarded to participate in the first wave of DLT trials, which use real central bank money. In addition, there are experiments involving simulations.
The Oesterreichische Nationalbank example was a simulation involving the tokenization and simulated settlement of government bonds against central bank money – a delivery versus payment (DvP) transaction.
The ECB says upcoming trials and experiments will include
- DvP transactions in primary and secondary markets
- securities lifecycle management
- automated wholesale payments, and
- payment-versus-payment transactions.
Participants can choose between three different settlement solutions. Only one of them is a wholesale central bank digital currency (CBDC) provided by the Banque de France. The Deutsche Bundesbank is providing its trigger payment solution which links to Target 2, and the Bank of Italy is providing the TIPS Hashlink offering.
Many argue that only on-chain settlement with the likes of a CBDC can provide full DLT benefits. One of the original motivations for institutional adoption of DLT was removing the need for reconciliation. If there’s a link to an external payment system, then reconciliations are still necessary. Hence, one of the outcomes being explored is the need to reconcile between DLT and participant systems.
Some of the participants have shared their plans for the trials, including Deutsche Börse’s Clearstream and SWIAT, which includes LBBW and Dekabank.
This first wave of trials runs until November this year. Applications are now closed for the second wave which starts in July and also runs until November.
