ECB Expands Blockchain Initiative for Central Bank Transactions

The European Central Bank (ECB) is expanding its initiative to explore a blockchain-based payment system for transactions in central bank money, which could pave the way for a wholesale central bank digital currency (CBDC). The ECB plans a 'two-track approach' that includes developing an interim platform for settlements through an interoperability link with TARGET Services, with a more integrated long-term solution also in consideration. ECB Executive Board member Piero Cipollone emphasized that these efforts aim to enhance efficiency in the European financial market while ensuring safety and stability. The initiative follows recent trials that highlighted the need for a seamless and secure method of DLT-based transactions to meet market demand and reduce risks associated with alternative settlement methods. The timeline for the interim solution is projected to be measured in months, not years, as the ECB works to establish necessary standards. This move is part of a broader goal to create a more harmonized and integrated European financial ecosystem.