The European Central Bank (ECB) has announced its plans to explore a blockchain-based payment system aimed at processing transactions in central bank money.
This initiative underscores the ECB’s commitment to integrating innovative financial solutions while ensuring the stability and security of its monetary system.
In a press release, the ECB revealed that its Governing Council has approved an initiative to expand the settlement of transactions recorded on distributed ledger technology (DLT) using central bank money. The approach will be implemented in two phases. First, the ECB will develop a secure and efficient interoperability link between blockchain-based transactions and TARGET Services. This connection will enable seamless settlement while maintaining operational safety. The Bank intends to provide a detailed timeline for this initiative soon.
For the second phase, the Eurosystem will explore a more comprehensive and integrated long-term framework for settling DLT-based transactions. This will include cross-border functionalities such as foreign exchange settlements, further advancing the ECB’s digital financial market infrastructure.
The ECB emphasized that the initiative aligns with its broader goal of fostering innovation while ensuring financial stability. By actively engaging with both public and private stakeholders, the Bank aims to support the development of blockchain applications within the financial sector. ECB Executive Board member Piero Cipollone highlighted that this step will enhance the efficiency of European financial markets and contribute to the creation of a more harmonized and integrated European financial ecosystem.
Additionally, the ECB views this initiative as a foundational step toward establishing a unified European market for digital assets. It aligns with the Governing Council’s vision of a digital capital markets union, aiming to improve efficiency, transparency, and security in financial transactions.
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