The trend towards the digitalisation of all areas of our lives is continuing unabated. This also applies to the financial sector. Many market players are therefore looking into how innovative technologies and concepts, such as distributed ledger technology (DLT)/blockchain, can be meaningfully deployed. In general, relevant business transactions in the financial sector also require a cash-leg settlement component, which can be structured in various ways. From a financial stability perspective, central banks consider it to be particularly important for financial transactions with systemic relevance to be settled in secure, risk-free central bank money, primarily in order to minimise existing credit and liquidity risks.

The Eurosystem has therefore been looking for some time at how DLT-based financial market transactions could be settled in central bank money. This is taking place under the heading “New technologies for wholesale central bank money settlement”, or ntw CeBM settlement for short.

On 28 April 2023, the ECB announced, via a press release, that the Eurosystem’s activities in this area, which had thus far mostly been restricted to conceptual work, would be expanded to include a practical exploratory phase with interested market participants. This phase is intended to provide additional practical insights into selected technical solution concepts and is scheduled for May to November 2024. The call for expression of interest, which was published on 13 December 2023, gave market participants the opportunity to express their interest in participating in this exploratory work.

The Bundesbank’s Trigger Solution

The Bundesbank is providing support for this exploratory work in the form of its DLT-based Trigger Solution, which links market DLT platforms to the Eurosystem’s traditional payment system. This allows DLT-based financial market transactions resulting from market-operated DLT platforms to be easily processed in central bank money in the T2 service of TARGET Services. In specific terms, bookings are made to the RTGS dedicated cash accounts (RTGS DCAs) of the T2 service. This means that market participants will benefit fully from the efficient and liquidity-saving mechanisms that already exist. At the same time, they do not need to further separate their liquidity for their DLT business, although this would, of course, be possible via a dedicated RTGS DCA. The Trigger Solution is based on the initial Trigger Solution that was developed and successfully tested together with Deutsche Börse and the German Finance Agency in 2021. It was subsequently adapted to the new framework conditions in the course of the transition from TARGET2 to T2.

You can find detailed information on the Bundesbank’s Trigger Solution in the Process Description Document, the User Requirements Document and the Onboarding Guide at the bottom of this page. In addition, the Bundesbank presented its Trigger Solution in the ECB’s Focus Session on 15 December 2023. The link to the video recording is available below as well.

Further technical specifications regarding the connection to and interaction with the Trigger Solution (e.g. API file, chain code) can be found in the Trigger Solution password-protected area, for which a separate registration is necessary. You can register via the link on this page. Access will only be granted to market participants and market DLT operators which use the Trigger Solution as part of the Eurosystem exploratory phase. The deadline to express an interest in the Eurosystem exploratory phase expired on 30 April 2024. Subsequent participation is no longer possible.

General information on the exploratory work of the Eurosystem

The exploratory work of the Eurosystem is scheduled for the period from May to November 2024. Exploration in this phase focuses exclusively on interoperability solutions, i.e. where assets and liquidity are located on different technical platforms. In addition to the assistance provided by the Bundesbank, two technical solutions are also being provided by Banca d’Italia and the Banque de France. Market participants have the opportunity to participate in the exploratory work for the entire period from May to November 2024 (wave 1 – deadline for expressing an interest: 31 January 2024) or for a shorter period from July to November 2024 (wave 2 – deadline for expressing an interest: 30 April 2024). In addition to experiments involving the settlement of transactions in test environments, the exploratory phase also includes equivalent trials in live systems. Participation is subject to certain eligibility criteria, the fulfilment of which had to be suitably demonstrated by interested market participants in their expressions of interest.

Further information on the exploratory work can be found on the ECB’s website.

Involvement of market participants

In the second quarter of 2023, the ECB established the New Technologies for Wholesale Settlement Contact Group (NTW-CG) to promote dialogue and the exchange of information with market participants. Representatives include banks, market infrastructures, innovative financial service providers and central banks.

At the national level, the Bundesbank has established the DE-NTW-CG as a forum to exchange with German market participants and to mirror the work of the NTW-CG at the European level.