ECB Tests Potential Solution For Wholesale CBDC Payments In 2024
- The European Central Bank (ECB) is exploring potential solutions for CBDC payments for wholesale financial transactions.
- New market contact group to foster dialogue and information exchange within the industry.
- The expected start date of the exploration work is in 2024.
The European Central Bank (ECB) will look at how wholesale financial transactions recorded on the DLT platform can be paid for with central bank money.
The aim of this initiative is to consolidate and further develop the ongoing work of Eurosystem central banks in this area and gain a better understanding of how different solutions can facilitate interaction between TARGET services and the DLT platform.
The announcement came at the inaugural meeting of a new industry group formed by the ECB last week, as conventional financial players continue to explore cryptocurrency and the blockchain technology that underpins it.
A dedicated market contact group will be established to support Eurosystem’s exploration work. This group will provide expert input and help Eurosystem keep abreast of advances in the use of DLT and other new technologies in the wholesale financial markets.
“The ECB that the envisioned start of central bank transactions is in 2024,” testing the use of central bank money in real and mock wholesale transactions, both the document said.
This work is part of a broader effort by the Eurosystem to ensure that the evolution of central bank money (CBDC) keeps pace with and contributes to digital innovation in wholesale and retail payments. The pre-central bank remained a monetary anchor supporting the stability, integration, and efficiency of the European financial and payment systems.
The European Commission on Wednesday proposed new laws that could bolster retail CBDCs, including consumer privacy and holding limits to prevent deposits from running out of the banking system.
At the end of May, the ECB finalized the prototypes for the digital euro as it prepares to make a decision later this year on whether to develop the EU’s fiat currency under the new format.
ECB says its potential central bank digital currency (CBDC) could be designed to drive innovation – but seems more skeptical about using Web3-style distributed ledger technology and smart contracts.
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