The European Central Bank’s (ECB) initiative to settle transactions recorded on distributed ledger technology (DLT) in central bank money has gained momentum over the last six months. Holger Neuhaus, head of the market innovation and integration division at ECB will look at what this means for Europe’s financial markets at the upcoming PostTrade 360° 2025 conference in September. He will be taking to the stage in a panel titled “After the ECB digital payment trials – towards a financial DLT ecosystem”.
The ECB successfully concluded a series of tests at the end of 2024. This was followed by the Eurosystem committing to the development and implementation of a DLT based-platform for DLT settlement in central bank money in February and again on the first of July this year. The plan is to do so through an interoperability link with TARGET services and explore a more integrated, long-term solution for settling DLT-based payments and securities transactions in central bank money – that will also include international operations such as FX settlement.
Neuhaus explains that one of the key attractions of using central bank money is that it takes financial risk out of the system because central bank money has basically no credit risk. Its availability can also facilitate transactions of banks’ customers who could use their bank account in novel ways.
“We already have a platform for making normal payments but also settlement of securities through T2S,” he says. “However, the emergence of DLT opens up the possibility of a different architecture that could remove market inefficiencies.”
Active participants in change
Neuhaus hopes attendees will leave the session not only with a clear idea of what has been done to date to create the financial DLT ecosystem but also the sense that they can make a contribution to its development.
“There is every chance that Europe will develop an ecosystem that overcomes some of the inefficiencies we have now and that this work will contribute to the capital markets union (CMU), savings and investments union (SIU), as well as a more efficient payments market,” he says.
But this will only happen through collaboration between the public and private sector. Being at the forefront and shaping developments is a much more attractive option than not moving and getting left behind.
Have you signed up yet to be in Stockholm for PostTrade 360° 2025 on 3–4 September? It’s free for securities operations pros, both trading and investor sides! (Vendor firm representatives need a sponsorship agreement.) The powerful event website lets you register, see all other delegates, schedule sessions and meetings, and message. Find all related articles, including loads of teaser interviews, here.
