European Central Bank Unveils Fresh Approach For Safer Settlement of Tokenised Trades Across DLT Platforms

Eurosystem initiative demonstrates early progress in linking digital asset transactions with trusted monetary networks

The European Central Bank (ECB) has revealed that it will widen its initiative allowing transactions recorded on distributed ledger technology (DLT) to be settled in central bank money.

This step follows earlier experiments focused on ensuring that tokenised assets, processed through DLT systems, can still draw on the safety of central bank liquidity.

Now, Eurosystem looks to push this idea further by working closely with TARGET Services, the ECB’s core payment and settlement infrastructure.

Eurosystem expands initiative to settle DLT-based transactions in central bank money

The European Central Bank (ECB) is the central bank of the European Union countries which have adopted the euro. Our main task is to maintain price stability in the euro area and so preserve the purchasing power of the single currency.

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Interoperability with TARGET Services

A key part of this initiative rests on forging a link between DLT-based transactions and TARGET Services. This link aims to ensure that banks and financial institutions who record trades on DLT platforms can rely on a trusted, real-time settlement hub.

In turn, these transactions would enjoy the same liquidity support as any payment cleared through the ECB’s existing networks. By focusing on interoperability, the ECB intends to protect the workflow that these institutions already have in place.

Safety and Efficiency at the Heart of the Plan

Eurosystem officials stress that DLT platforms need robust settlement solutions. Trust in digital assets can falter if there is any doubt about the settlement layer. By anchoring DLT transactions in central bank money, the ECB addresses concerns about counterparty risk, liquidity constraints, and the reliability of private settlement tokens.

This approach involves creating a platform that can handle high volumes without sacrificing speed or transparency.

International Operations on the Horizon

As part of the long-term plan, Eurosystem also wants to include cross-border settlements in foreign exchange trades.

The ambition is to extend the benefits of central bank settlement far beyond the euro area, possibly lowering risk for businesses and financial institutions that handle multiple currencies.

If the interoperability link with TARGET Services proves workable, the ECB’s next phase will be to integrate foreign exchange and cross-border transactions more seamlessly.