European Central Bank (ECB) trials and experiments have shown the importance of central bank money settlement to the development of European DLT-based capital markets. According to data from the Association for Financial Markets in Europe (AFME), the ECB trials and experiments were linked to >€1 billion worth of DLT-based bond issuance in 2024, ca. 1/3 of the total such issuance worldwide.
It is crucial that the ECB continue to build on this momentum in a way that enables Europe to remain in the lead when it comes to the scaling and maturing of DLT-based markets, especially at a moment where jurisdictions worldwide are taking steps to develop theirs, writes AFME in a recent report.
“Building DLT-based markets can also play a crucial role in achieving key EU policy objectives in the area of competitiveness, Capital Markets Union and enhancing efficiency in and ensuring robustness of capital markets,” AFME wrote.
Two key building blocks towards at-scale DLT-based markets that fall within the ECB’s remit include:
- Availability of a well-designed solution for settlement in central bank money of DLT-based transactions; and
- Eligibility of DLT-based assets to serve as collateral in Eurosystem credit operations