Successful T2S Transaction In Central Bank Digital Currency06.22.2021
– Banque Internationale à Luxembourg, LuxCSD and Seba Bank tested use of Central Bank Digital Currency (CBDC) for securities transactions
– Conducted by Banque de France, the delivery of securities in the European platform, TARGET2-Securities (T2S) against a payment in CBDC was successfully tested
Banque de France successfully used Central Bank Digital Currency (CBDC) in a test environment, in connection with TARGET2-Securities (T2S), the European Central Bank settlement platform.
SEBA Bank purchased securities from Banque Internationale à Luxembourg, while post-trade settlement was handled by LuxCSD, the Luxembourg central securities depository. The transaction was carried out through the Conditional Securities Delivery functionality (CoSD) already existing in T2S, which makes the booking of securities dependent on the success of an event external to T2S. Banque de France simulated CBDC tokens on a public blockchain, while preserving confidentiality of the transactions. As soon as the tokens were successfully transferred from SEBA Bank to Banque Internationale à Luxembourg, LuxCSD delivered the securities in T2S.
Central Bank Digital Currency describes a concept of digital currency issued by a central bank. Currently, central banks around the world are examining the potential of CBDC for the respective jurisdictions. The test demonstrated that distributed ledger technology (DLT) could be used to issue CBDC in connection with existing infrastructures such as T2S, where listed securities are delivered.
Serge Munten, Head of Operations at Banque Internationale à Luxembourg, commented: “The world of payments is evolving fast with digitalisation. At BIL, we strive to bring our clients the latest innovation in terms of payments services. It was only natural for us to participate in this experiment, which might determine the future of Central Bank Digital Currency in the eurosystem.”
Marco Caligaris, Chief Executive Officer at LuxCSD, added: “Connecting new technology, such as DLT, with existing infrastructure is crucial to offer optimal services for the market. By joining forces, the industry can develop sustainable solutions that not only work today but lay a strong foundation for the future. Being a trusted central securities depository at the heart Internal of one of Europe’s financial centres, LuxCSD is perfectly positioned to support the industry on its way towards a true digital finance ecosystem.”
This test is one of many conducted by Banque de France to explore design options for the technical implementation of a digital euro at the level of the back-end infrastructure and enduser access solutions. It is part of a larger initiative launched in the eurosystem in 2020 to advance work on the possible issuance of a digital euro – an electronic form of central bank money accessible to all citizens and firms, alongside cash.
The capital raise is expected to strengthen the group’s CET1 ratio by 140 basis points.
Aim is improve risk management, boost efficiency and enhance customer service.
As rates and volatility rise, the need to optimise the value of collateral is greater than ever.
The banks allegedly colluded to distort competition when trading bonds.
Taylor Cable will lead Cowen Digital’s European and Asian activities.