ECB Takes Steps for DLT Transactions

The Governing Council of the European Central Bank (ECB) has initiated efforts to settle transactions recorded on distributed ledger technology (DLT) using central bank money.

Announced on Feb. 20, this decision aims to integrate DLT with the existing TARGET Services infrastructure.

Two-Track Strategy

The ECB’s approach will follow a two-track strategy:

1. Rapid Development: Developing a safe and efficient DLT-based settlement platform ensuring interoperability with TARGET Services.
2. Long-Term Solutions: Exploring integrated solutions for settling DLT transactions in central bank money, including foreign exchange settlements.

> 🔴 Are you ready for the “European blockchain”?
>
> The @ecb has just announced that it wants to develop a private blockchain for its wholesale central bank digital currency👀.
>
> Link to the PR
> — Louis Tellier (@Louis_Tellier) February 20, 2025

European Central Bank Executive Board member Piero Cipollone highlighted the importance of balancing innovation with financial stability, stating, “We are embracing innovation without compromising on safety and stability.”

He previously mentioned the ECB’s work on a digital euro, which aims to serve as an electronic form of cash for digital payments.

Building an Integrated European Market

This initiative is part of broader ECB efforts to establish a more integrated European market for digital assets. It builds on past exploratory work from May to November 2024, which involved 64 participants, including central banks, financial market participants, and DLT platform operators.

These trials set the groundwork for this new initiative.

As part of the strategy, the ECB Governing Council has also called for promoting a digital capital markets union to enhance the growth of digital asset markets across Europe.

In contrast, blockchain expert Fiorenzo Manganiello suggested that European Central Banks might start accumulating Bitcoin this year.

Conclusion

The ECB is pushing forward on digital euro integration, aligning with the global push for central bank digital currencies (CBDCs).