Major financial institutions comprise the new participants in the European Central Bank’s DLT experiments.
The European Central Bank (ECB) is extending the distributed ledger technology (DLT) exercise that it initiated in April. With the addition of three additional central banks and an influx of private financial institutions, this second phase of testing will investigate new use cases.
The new phase will involve forty-eight financial institutions. Among these are divisions of numerous of the world’s largest institutions, including ABN AMRO, BNP Paribas, Bank of New York Mellon, HSBC, J.P. Morgan, and Société Générale.
The newly established cadre will participate in a variety of securities-related use cases, wholesale domestic payments within the euro area, and foreign exchange payment-versus-payment transactions among central banks through testing. The subsequent two experiments will involve live settlements that utilize central bank money, as opposed to commercial bank money.
14 participants, including private institutions and central banks, participated in the initial phase of testing. Some of these were included in the second wave and examined the delivery-versus-payment settlement of transactions with government bonds. These transactions were settled using three interoperability solutions developed by various European central banks: the Trigger Solution of the Deutsche Bundesbank, the TIPS Hash-link of Banca d’Italia, and the Full DLT Interoperability of the Banque de France.
Delivery-versus-payment and payment-versus-payment are examples of real-time aggregate settlement. The evaluations focus on the interaction between the ECB’s existing TARGET settlement system and DLT transactions for interoperability.
The experiments are applicable to central bank digital currency (CBDC) and utilize cash and tokenized securities. CBDC comprised solely the French solution.
In an extension of Project Meridian, the identical three interoperability systems will undergo testing. The Bank of England is participating in that initiative. It also comprises the central banks of the Netherlands, Spain, the Netherlands, Belgium, Germany, France, Italy, Lithuania, and Spain, as well as the Hong Kong Monetary Authority.
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