ECB to Start Wholesale CBDC Settlement Trials in 2024


29 Jun 2023 9:04 AM

The European Central Bank wants to see innovative interventions in financial markets – but under existing rules....

  • The European Central Bank (ECB) will begin exploratory work for financial market settlement using distributed ledger technology (DLT) in 2024.
  • The ECB aims to innovate in settling transactions between financial institutions for securities or foreign exchange.
  • They are also developing plans for a retail central bank digital currency (CBDC), known as the digital euro.
  • The exploratory work will involve testing the use of central bank money in both real and mock wholesale transactions.
  • The work will be limited in capacity and time and will follow existing rules, including a new pilot regulation passed by the EU last year.
  • The announcement was made at the inaugural meeting of a new industry grouping set up by the ECB, which includes traditional finance players and DLT-focused initiatives.
  • The European Commission has proposed new laws to support a retail CBDC, including consumer privacy and holding limits.
  • Using DLT in financial markets could potentially save $100 billion per year by freeing up collateral and automating processes.

The article presents the European Central Bank's plans to explore the use of distributed ledger technology for financial market settlement and the development of a retail central bank digital currency. The tone of the article is informative and neutral.

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When will the European Central Bank start exploratory work for financial market settlement using distributed ledger technology?What is the purpose of the exploratory work?What is the digital euro?How will the exploratory work be conducted?What potential savings can be achieved by using distributed ledger technology in financial markets?

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