European Central Bank Plans Settlement System for Distributed-Ledger Transactions

The European Central Bank (ECB) is developing a method for settling distributed ledger technology (DLT) transactions with fiat currency. Key points include:

• The ECB plans a two-stage approach to implement DLT.
• Initially, it will create a system linked to its existing Target settlement system, facilitating cash, securities, and collateral flow across Europe.
• The second phase aims for a long-term solution for DLT-based transitions, including foreign exchange settlements.
• Since 2023, the ECB has explored digital currency technologies, aiming for "wholesale financial transactions" on DLT platforms settled in central bank money.
• A timeline for these initiatives will be announced later.