Exploratory work on new technologies for wholesale central bank money settlement
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Amid growing interest in potentially using distributed ledger technology (DLT) to settle wholesale financial transactions, in 2024 the Eurosystem tested three interoperability-type solutions.
In its exploratory work, the Eurosystem aimed (i) to consolidate and further develop the ongoing work of Eurosystem central banks in this area, (ii) to gain insights into how different solutions could facilitate interaction between TARGET Services and DLT platforms, and (iii) to meet market demand for central bank money solutions for the DLT Pilot Regime, which commenced in March 2023.
Financial market stakeholders were invited to take part in trials and experiments to explore new technologies for wholesale central bank money settlement. The trials involved transactions with actual settlement in central bank money, while the experiments involved mock settlement in a test environment. A total of 60 firms from the financial sector and four central banks participated in this exploratory work between May and November 2024
A set of key performance indicators were used to assess the results of the trials and experiments.
The exploratory work was successfully concluded in November 2024, with over 200 transactions and a total value of €1.59 billion settled.
In February 2025, the ECB Governing Council decided to expand its initiative to settle transactions recorded on DLT in central bank money. The initiative will follow a two-track approach.
Press release: Eurosystem expands initiative to settle DLT-based transactions in central bank moneyUse cases tested within the exploratory work
| Experiments with mock settlement | Trials with actual settlement |
Primary issuance of bonds by financials and settlement with delivery-versus-payment, as well as: • Lifecycle management of securities, e.g. coupon payment and redemption • Secondary market transactions |
Primary issuance of bonds by financials, corporates and a sovereign, and settlement with delivery-versus-payment, as well as: • Lifecycle management of securities, e.g. coupon payment and redemption • Secondary market transactions |
Cross-currency payment-versus-payment transactions with another central bank |
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Interbank deposit token transfers with related settlement in central bank money |
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Automated wholesale payments |
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Margin calls |
Margin calls |
Overnight repurchase agreements |
Intraday and overnight repurchase agreements |
Settlement of payments related to interest rate swaps via smart contracts |
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Interbank reconciliation of bilateral accounts with settlement of outstanding balances in central bank money |
The Eurosystem makes central bank money (the safest and most liquid settlement asset) available in digital form for wholesale settlement via its TARGET Services. It is committed to continuing to provide central bank money settlement and support the settlement of wholesale transactions via market infrastructures that are fit for purpose.
For this reason, the Eurosystem closely monitors market developments in the field of market infrastructures involving the use of innovative technologies, such as DLT, for wholesale payments and securities settlement.
Keynote speech: Towards a digital capital markets union, Piero Cipollone, Member of the Executive Board of the ECB, at the Bundesbank Symposium on the Future of PaymentsNew Technologies for Wholesale settlement Contact Group
The New Technologies for Wholesale settlement Contact Group (NTW-CG) provides expert input and keeps the Eurosystem up to date with advances in the use of distributed ledger technology and other new technologies in wholesale financial markets. The NTW-CG has no formal advisory or steering role with respect to the Eurosystem’s exploratory work.
• Terms of Reference for the NTW-CG
To ensure openness and broad representation, membership is subject to an annual review. Market participants are welcome to express their interest in joining the NTW-CG by submitting an application form and relevant documentation to the NTW-CG Secretariat.