Pan-European clearing house Cboe Clear Europe has participated in the Eurosystem’s wholesale DLT settlement trials to test wholesale central bank digital currency (wCBDC) as collateral for margin calls.
Partnering with ABN Amro Clearing Bank, Cboe Clear Europe aimed, according to a press release, to explore the use of Euro central bank money for margin calls after the EU’s TARGET payment system closes, currently relying on US dollar commercial bank money.
The trials focused on several key functionalities: managing insufficient CBDC for margin calls, withdrawals, early redemptions, and end-of-day balance redemptions. These tests aim to assess the viability of wCBDC for out-of-hours margin calls.
A key consideration if the ECB introduces a wholesale CBDC is whether it will be treated the same as other central bank reserves, including earning comparable interest, to encourage use outside TARGET operating hours.
Three options
The DLT trials offer three settlement options: Banque de France’s CBDC system, Bundesbank’s Trigger solution, and Bank of Italy’s TIPS Hash Link solution. Only the French option uses CBDC; the other two settle in conventional central bank money.
Cboe Clear Europe joined the second wave of 48 participants in the ECB’s trials, adding to the 14 participants from the first wave.
