The European Central Bank (ECB) is exploring options for settling transactions based on distributed ledger technology (DLT) using fiat currency.
To address this, the ECB is adopting a two-pronged strategy. Initially, it will develop and implement a platform allowing such settlements in central bank money, which will be linked to existing Target Services for interoperability.
In the longer term, the Eurosystem aims to establish a more comprehensive solution for DLT-based transactions in central bank money, which will also facilitate international operations, including foreign exchange settlements.
ECB Executive Board member Piero Cipollone stated, “We are embracing innovation without compromising on safety and stability.” He emphasized that this initiative will significantly enhance the efficiency of European financial markets through innovation. Cipollone also noted that the approach will be mindful of the Eurosystem’s objective to foster a more harmonized and integrated European financial ecosystem.