🌎 European Central Bank Advances on DLT Settlements

European Central Bank Advances Initiative for Distributed Ledger Technology Settlements

The European Central Bank’s (ECB) Governing Council has taken a significant step towards settling transactions recorded on distributed ledger technology (DLT) using central bank money. This decision aims to integrate DLT with the existing TARGET Services infrastructure, promoting a more efficient and secure platform for financial transactions.

A Two-Track Strategy for DLT Settlements

The ECB’s approach will follow a two-track strategy. The first track focuses on rapidly developing a safe and efficient platform for DLT-based settlements while ensuring interoperability with TARGET Services. The second track will focus on a long-term integrated solution for settling DLT-based transactions in central bank money, including foreign exchange settlements.

We are embracing innovation without compromising on safety and stability.

European Central Bank Executive Board member Piero Cipollone emphasized the importance of balancing innovation with financial stability. This initiative aligns with the ECB’s broader efforts to establish a more integrated European market for digital assets.

Building an Integrated European Market

The ECB’s strategy builds on prior exploratory work conducted between May and November 2024, which involved 64 participants, including central banks, financial market participants, and DLT platform operators. These trials and experiments set the stage for this expanded initiative.

As part of the ECB’s strategy, the Governing Council has also called for the promotion of a digital capital markets union, which will further facilitate the growth of digital asset markets across Europe. This development is expected to have a significant impact on the digital payments landscape in Europe.

Some key aspects of the ECB’s initiative include: