In a move to test the use of distributed-ledger technology (DLT) for settling wholesale transactions of a central bank digital currency, Clearstream, the private market platform owned by Deutsche Börse AG; DekaBank, a German securities services provider; and Germany-based DZ Bank successfully issued two tokenised €5million bonds using DLT.
The process leveraged Deutsche Börse’s D7 DLT, which was launched for European Central Bank CBDC trials. This included the transaction of the security itself, as well as the transfer of funds using digital central bank money – from issuance via distribution and settlement to full lifecycle management.
DekaBank acted as issuer, DZ Bank as an investor – with the two parties swapping roles for a second test. Meanwhile, Clearstream acted as DLT Market Operator, providing the technical infrastructure with its digital securities platform D7 developed in strategic partnership with Google Cloud.
The transactions mark the first institutional-grade issuances in Germany on DLT using wholesale digital central bank money. Issuing securities on DLT increases transparency and automation, which also reduces the need for manual intervention. Additionally, using central bank money provides enhanced safety, liquidity and monetary policy alignment for issuers and investors alike.
“To explore the potential of digital assets, you have to take care of the whole lifecycle – from issuance via DVP settlement to maturity including the utilisation of central bank money,” explained Dr Holger Meffert, head of securities services and digital custody at DZ Bank. “Participating in the ECB trials with strong partners like Deutsche Börse Group and DekaBank, we are delighted to get valuable insights on our way to higher efficiency.”
Testing CBDC potential
Jens Hachmeister, head of issuer services and new digital markets at Clearstream
Jens Hachmeister, head of issuer services and new digital markets at Clearstream, also explained the importance of the test: “With the next-generation digital post-trade platform D7 Clearstream aims to digitise the entire post-trade value chain. With our new D7 DLT, launched for the ECB trials, we provide seamless processing of digital assets and high-quality cash on-chain, which is an important step in developing a digital European securities landscape.
“This transaction represents a significant milestone for the creation of stable digital capital markets in Germany and Europe, demonstrating the power of digital solutions in enhancing safety, liquidity and efficiency.”
The ECB trials are conducted using real central bank money, with a timeframe set for May to November 2024.
Silvio Lenk, head of treasury at DekaBank, commented: “The use case impresses with the simplicity of issuing a security with DLT technology and at the same time benefiting from the advantages of the Trigger Solution. The delivery versus payment of the Trigger Solution proves how the issuing and settlement processes of private blockchains and wholesale CBDC will interact in future. As issuer, banks benefit from the speed, scalability and security of the new technology.”
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