Global: ECB Explores Settlement of DLT-Based Transactions in Central Bank Money

The European Central Bank (ECB) is actively investigating how to settle transactions using distributed ledger technology (DLT) in central bank money. This initiative reflects the ECB’s commitment to embracing financial innovation while maintaining stability and security.

To achieve this, the ECB is pursuing a two-track approach:

1. Interoperability with Target Services – The first phase involves developing a settlement platform that integrates DLT transactions with the ECB’s existing Target Services.
2. Long-Term Integrated Solution – The second phase focuses on a comprehensive framework for DLT-based settlements in central bank money, expanding to include cross-border transactions such as foreign exchange settlements.

ECB Executive Board Member Piero Cipollone highlighted the importance of this initiative, stating:
“We are embracing innovation without compromising on safety and stability. This is an important contribution to enhancing European financial market efficiency through innovation. Our approach will pay due attention to the Eurosystem’s goal of achieving a more harmonized and integrated European financial ecosystem.”

As the Eurosystem explores the future of digital finance, this move positions the ECB at the forefront of DLT adoption in central banking, ensuring seamless, secure, and efficient financial transactions across Europe.