The European Central Bank (ECB) has announced steps forward in achieving an integrated European market for digital assets.
The bank’s Governing Council has decided to expand its initiative of settling transactions recorded via Disturbed Ledger Technology (DLT) in central bank money.
This forms part of a wider commitment to embracing in the Eurosystem, the monetary authority of the Eurozone – the term referring to the 20 countries out of the EU’s 27 member states which use the euro as national currency.
“We are embracing innovation without compromising on safety and stability,” said Piero Cipollone, ECB Executive Board Member.
“This is an important contribution to enhancing European financial market efficiency through innovation. Our approach will pay due attention to the Eurosystem’s goal of achieving a more harmonised and integrated European financial ecosystem.”
The ECB’s plans around DLT and central bank money will follow a two step approach. Firstly, the ECB wants to find a ‘safe and efficient platform’ for DLT settlement of central bank money transactions.
This will ideally come via an interoperability link with the TARGET services, the ECB’s system for free flow of cash, securities and collateral across Europe. The ECB states that ‘a concrete time plan’ for this process will ‘be announced in due course’.
Secondly, the bank states that the Eurosystem will examine how a ‘more integrated, long-term solution for settling DLT-based transactions in central bank money’ could be implemented. Such a system would include international operations like foreign exchange settlement.
As stated above, the ECB states that it wants to help create an integrated European market for digital assets. This falls in line with other regulatory efforts at the EU level, such as the implementation of the Markets in Crypto-Asset (MiCA) regulations, while the ECB continues to examine the potential of a ‘digital Euro’ central bank digital currency (CBDC).
