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ECB conducts first DLT trials for wholesale central bank money settlement

The Eurosystem has begun the first of a series of trials to test the use of distributed ledger technology (DLT) for the settlement of wholesale transactions in central bank money.

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ECB conducts first DLT trials for wholesale central bank money settlement

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Initially, 16 private companies (10 market participants and six market DLT operators) have been onboarded alongside five central banks to conduct live trials involving actual settlement in central bank money and experiments with mock settlement in test environments.

The first experiment, carried out by Oesterreichische Nationalbank, covered the tokenisation and simulated delivery-versus-payment (DvP) settlement of government bonds in a secondary market transaction against central bank money.

Preparations for further trials and experiments are ongoing and will cover a variety of use cases, including DvP transactions in primary and secondary markets, securities lifecycle management, automated wholesale payments and payment-versus-payment transactions.

The trials will continue over the next six months, providing the Eurosystem with insights into how the Target settlement system and distributed ledger technology (DLT) platforms could interact and into the "potential merits of using new technologies in wholesale financial markets".

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