ECB eyes blockchain-based payment settlement layer

The European Central Bank (ECB) is moving to found a blockchain-based outgo strategy that volition let fiscal institutions to settee transactions utilizing cardinal slope money, Bloomberg News reported connected Feb. 20.

ECB enforcement committee subordinate Piero Cipollone said the task is simply a measurement toward improving fiscal marketplace ratio done innovation.

Phased approach

The task volition beryllium rolled retired successful 2 phases. Initially, a blockchain level volition beryllium connected to the existing Target colony system, which operates with cardinal slope money.

Meanwhile, the 2nd signifier volition absorption connected gathering a afloat integrated solution, including overseas speech transactions.

The ECB has not provided a timeline for implementation but has indicated that the inaugural could laic the groundwork for a wholesale cardinal slope integer currency (CBDC) by introducing cardinal slope wealth into a blockchain-based environment.

Switzerland has taken a akin approach. In December 2023, the Swiss National Bank launched a aviator wholesale CBDC to facilitate the colony of integer bonds. Initially planned arsenic a short-term trial, the task has been extended until astatine slightest 2026 to further measure its interaction connected fiscal markets.

Countering stablecoins’ influence

Cipollone recently emphasized the request to accelerate the motorboat of a integer euro, citing concerns implicit the increasing power of dollar-backed stablecoins. He urged the ECB to accelerate the deployment of the integer euro arsenic a countermeasure to the increasing adoption of backstage stablecoins.

His remarks followed an executive order signed by President Donald Trump connected Jan. 23 promoting the enlargement of stablecoins portion prohibiting national agencies from advancing a CBDC.

Despite regulatory support, eurozone banks person expressed concerns astir imaginable deposit losses. To code this, the ECB has projected capping integer euro holdings and ensuring they stay non-interest-bearing. 

The project’s advancement depends connected European lawmakers passing the indispensable legislation. A prototype improvement signifier volition statesman this year.

The station ECB eyes blockchain-based outgo colony layer appeared archetypal connected CryptoSlate.