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Bitcoin (BTC) and Beyond: DLT Meets Central Bank Money in Eurosystem’s Innovative Wholesale Trials

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  • Call for DLT Trial Participants: The Eurosystem has opened applications for participants in wholesale settlement trials using Distributed Ledger Technology (DLT) with central bank money.
  • Broad Eligibility and Two Waves of Trials: The trials, open to banks, central securities depositories, and DLT platform operators, are scheduled in two waves, with deadlines for applications in January and April 2024.

Eurosystem’s Ambitious Exploration of DLT in Payment Settlement

The Eurosystem, comprising the European Central Bank and the national central banks of the Eurozone, has recently initiated a call for participants in a pioneering project involving wholesale settlement trials using Distributed Ledger Technology (DLT) networks. This project marks a significant step toward integrating DLT with central bank money for the settlement of digital securities transactions.

Scope and Objectives of the DLT Trials

The primary objective of these trials is to facilitate the use of central bank money in delivery versus payment (DvP) transactions involving DLT-based digital securities. By conducting these trials, the Eurosystem aims to explore the potential of DLT in improving the efficiency and security of wholesale payment systems.

The participant eligibility for these trials is reasonably broad, encompassing various institutions such as banks with access to the TARGET payment system, qualifying central securities depositories, operators of platforms under the DLT Pilot Regime, and other licensed institutions operating DLT platforms. The national central banks will assess certain participant groups, such as non-bank institutions, on a case-by-case basis.

Phases and Technical Details of the Trials

There will be two distinct phases of the trials, with application deadlines set for January 31, 2024, for the first wave and April 30, 2024, for the second. Participants can submit questions until January 12. The trials will include three distinct solutions: Germany’s Trigger solution, Italy’s TIPS Hash link solution, and the ‘Full-DLT interoperability’ solution from the Banque de France. Notably, the Banque de France’s solution involves “exploratory cash tokens,” which differ from a typical wholesale central bank digital currency (CBDC).

The trials are subject to volume limitations in terms of the number of transactions per day and participant numbers. Germany’s solution permits up to 500 DvP transactions daily with a maximum of 25 participants, while the French and Italian solutions allow for lower transaction volumes and participant numbers. These limits aim to ensure safe and fair service provision. Currently, there are no value limits imposed on transactions, but such restrictions may be introduced later.

Virtual Session and Demonstrations

To further engage potential participants, a virtual session, including demonstrations of the three settlement solutions, is scheduled for the morning of December 14.

In conclusion, the Eurosystem’s initiative to conduct DLT payment trials with a broad range of participants signifies a crucial step in exploring the integration of advanced technologies with traditional financial systems. As the trials progress, they are poised to offer valuable insights into the potential efficiencies and enhancements that DLT can bring to the realm of financial transactions and settlements.

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Godfrey Benjamin
Godfrey Benjamin
Godfrey Benjamin is an experienced crypto journalist whose primary goal is to educate everyone about the prospects of Web 3.0. His love for crypto was sparked during his time as a former banker when he recognized the clear advantages of decentralized money over traditional payments. Business Email: info@ethnews.com Phone: +49 160 92211628