ECB Initiates Initial DLT Trials for Wholesale Central Bank Money Settlement

European Central Bank (ECB) is leading a cooperative effort to investigate the ability of distributed ledger technology (DLT) to resolve wholesale transactions utilizing central bank funds.

The preliminary stages of examinations will involve 10 market players, six DLT operators, and another five central banks.

The Trials Will Also Explore Prospective Use Cases For Cross-Border Payments

This test will contain real settlement business dealings in central bank funds, and also settlement exercises carried out in a regulated test setting.

These trials center around different areas of the security settlement cycle, encompassing secondary market transactions, delivery-versus-payment, and the lifecycle management of securities.

Apart from the aforementioned focuses, these tests will also venture into prospective use cases relating to cross-border payments, just like payment-versus-payment cases.

Among those entities involved in the project is Clearstream, a post-trade business branch of Deutsche Borse utilizing its online post-trade platform, D7 having been supported with the DLT capacities.

Jens Hachmeister, Chief of Issuer Services and New Digital Markets at Clearstream, gave his opinion on the importance of Clearstream’s participation in the ECB test. He explained that it is a focal point in their journey to achieve digitization.

He further spoke on the growth, expansion, and development of Clearstream’s D7 digital securities system with DLT mechanisms   He also went ahead stressing the need to establish a connection with vital digital payment offerings throughout the Eurosystem.

The ECB’s Primary Aim Is To Stabilize Prices In The Euro Community

As regards the monetary policy union, the European Central Bank (ECB) is the bank responsible for all monetary activities. This bank is situated in Frankfurt and has shouldered the responsibilities of monetary policy in the Euro area since 1999, when the euro was first accepted as a legal tender by the EU members

This legal tender union is known as the eurozone and presently consists of 19 nations. The European Central Bank’s primary aim is to stabilize prices in the euro community.

Every decision on eurozone monetary policies is made by the ECB governing council. This Council comprising of six executive board members and a cycling of 15 national central bank governors.

Voting rights are to be in rotation yearly, just as the regional Federal Reserve bank pattern, the European Central Bank rotates voting rights monthly.

The ECB’s operations are directly overseen by European Union legislation. Its capital equity, valued at €11 billion, is collectively held by all 27 central banks of the European Union member states.