Exploratory work on new technologies for wholesale central bank money settlement
The money that we create at the ECB is called central bank money. Banks already access a form of central bank digital money when they participate in real-time gross settlement systems that are owned and operated by central banks. These systems are used to settle wholesale payments related to monetary policy operations and bank-to-bank transactions.
Work on how wholesale financial transactions recorded on distributed ledger technology (DLT) platforms could be settled in central bank money is underway. The purpose of the initiative is to (i) consolidate and further develop the ongoing work of Eurosystem central banks in this area, and (ii) gain insight into how different solutions could facilitate interaction between TARGET Services and distributed ledger technology platforms.
Financial market stakeholders were invited to take part in trials and experiments to explore new technologies for wholesale central bank money settlement. The trials include transactions with actual settlement in central bank money and the experiments use mock settlement in a test environment. A total of 60 private firms from the financial sector and four central banks are participating in this exploratory work.
A set of key performance indicators are used to assess the results of the trials and experiments.
Use cases tested within the exploratory work (updated 23 September 2024)
| Experiments with mock settlement | Trials with actual settlement |
Primary issuance of bonds by financials and settlement with delivery-versus-payment |
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 other 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 |
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Repurchase agreement |
New Technologies for Wholesale settlement Contact Group
The New Technologies for Wholesale settlement Contact Group (NTW-CG) aims to support the Eurosystem’s exploratory work on wholesale central bank money settlement. This group 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 by 15 May of each year at the latest.