EIB to Lead Two Projects in Eurosystem’s Exploration of DLT for Wholesale Financial Settlements
(IN BRIEF) The European Investment Bank (EIB) is actively participating in the Eurosystem’s exploration of distributed ledger technology (DLT) for settling wholesale financial transactions in central bank money. The EIB will be involved in two distinct projects under this initiative, reaffirming its leadership in digital finance within the EU. Since 2021, the bank has issued four digital bonds worth nearly €400 million, and this new venture builds on its expertise, aiming to demonstrate the benefits of Delivery vs. Payment (DvP) on DLT platforms for institutional investors. More details on the projects will be disclosed later, as the EIB continues to contribute to financial innovation in Europe.
(PRESS RELEASE) LUXEMBOURG, 24-Oct-2024 — /EuropaWire/ — The European Investment Bank (EIB) has announced its involvement in the Eurosystem’s exploratory work on the potential use of distributed ledger technology (DLT) for the settlement of wholesale financial transactions in central bank money. This initiative aligns with the EIB’s ongoing commitment to advancing digital solutions in the financial sector and its continued leadership in digital bond issuance within the European Union.
Through this collaboration, the EIB reaffirms its strategic focus on supporting innovative financial instruments that strengthen Europe’s capital markets. The bank is preparing to engage in two projects within the framework of the Eurosystem’s initiative, each showcasing a different technological approach to using DLT platforms for wholesale transaction settlements in central bank money.
Since 2021, the EIB has accumulated valuable experience with the digitalization of capital markets, having issued four digital bonds worth close to €400 million across multiple jurisdictions. The growing maturity of DLT platforms and the availability of settlement options in central bank money are enabling the EIB to further advance its efforts in digital finance.
Xavier Leroy, Senior Funding Officer at the EIB, emphasized the importance of these projects, stating, “Each initiative offers distinct characteristics, and we are eager to demonstrate the full benefits of Delivery vs. Payment (DvP) on DLT platforms while creating opportunities for institutional investors to participate.”
More detailed information regarding the specifics of each project will be shared in due course, with the EIB keen to contribute to the broader discussion on the application of DLT in capital markets. This work underlines the institution’s role as a key driver of financial innovation in Europe.
The Eurosystem is exploring how wholesale financial transactions recorded on DLT platforms could be settled in central bank money. The purpose of this effort is to (i) consolidate and further develop the ongoing work of Eurosystem central banks in this area, and (ii) gain insight into how different solutions could facilitate interaction between TARGET services and DLT platforms. The Eurosystem has established a dedicated market contact group, the New Technologies for Wholesale Settlement Contact Group (NTW-CG), which provides expert input and aims to keep the Eurosystem up to date with advances in the use of distributed ledger technology and other new technologies in wholesale financial markets.
From May to November 2024, participants of NTW-CG have been able to pursue trials with actual settlement in central bank money and/or experiments with mock settlement in a test environment. The exploratory work has been focusing on three interoperability-based solutions developed by Solution Provider Central Banks (SPCBs). This includes Trigger Solution by Deutsche Bundesbank, TIPS Hash Link by Banca d’Italia, and Full-DLT Interoperability “DL3S” by the Banque de France. Use cases for the exploratory work include DvP for securities settlement and lifecycle management as well as Payment vs. Payment (PvP) for payments.
The European Investment Bank (EIB) is the European Union’s long-term financing institution, owned by its Member States. It finances sound investments that contribute to EU policy goals.
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Publish date : 2024-10-24 07:08:00
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