EddieJayonCrypto
21 Feb 25
The European Central Bank (ECB) is developing a blockchain-based payment settlement system to enable financial institutions to settle transactions using central bank money. The project will be implemented in two phases, initially connecting a blockchain platform to the existing Target settlement sys...
The European Central Bank (ECB) is taking steps to establish a blockchain-based payment settlement system, allowing financial institutions to settle transactions using central bank money. This project will be rolled out in two phases, with the initial phase linking a blockchain platform to the existing Target settlement system. The subsequent phase will focus on a fully integrated solution, including foreign exchange transactions.
The ECB has not provided a specific timeline for implementation but has suggested that this initiative could pave the way for a wholesale central bank digital currency (CBDC) by introducing central bank money into a blockchain-based environment. Switzerland has similarly launched a pilot wholesale CBDC to facilitate digital bond settlement, with its project extended until at least 2026 to further evaluate its impact on financial markets.
ECB executive board member Piero Cipollone has stressed the need to accelerate the launch of a digital euro to counter the growing influence of dollar-backed stablecoins. Concerns have been raised about potential deposit losses, prompting the ECB to propose capping digital euro holdings and ensuring they remain non-interest-bearing. However, the project’s progression hinges on European lawmakers passing necessary legislation, with a prototype development phase set to commence this year.