The ECB is expanding its DLT test that began in April, moving on to a new phase with an increase in private financial institutions and three additional central banks involved.
A total of 48 financial institutions will be taking part in this new phase, including divisions of major banks like ABN AMRO, BNP Paribas, Bank of New York Mellon, HSBC, J.P. Morgan, and Société Générale. Participants were selected through a call for applicants issued in December.
The new group will be testing wholesale domestic payments within the euro area, various securities-related scenarios, and foreign exchange payment-versus-payment transactions between central banks. Unlike the first phase, these tests will involve live settlements using central bank money instead of commercial bank money.
The initial testing phase had 14 participants, including private institutions and central banks. Some of these are also part of the second phase, focusing on delivery-versus-payment settlement of transactions involving government bonds and using three interoperability solutions created by different European central banks.
The tests are concentrated on the interaction between DLT transaction interoperability and the ECB’s existing TARGET settlement system, with potential applications for cash, tokenized securities, and even central bank digital currency (CBDC). The French solution was specifically designed for CBDC.
The continuation of Project Meridian will include testing the same three interoperability systems, with the Bank of England and other central banks from Belgium, Germany, France, Italy, Lithuania, the Netherlands, Spain, and the Hong Kong Monetary Authority participating.
The expansion of the DLT test by the ECB showcases the growing interest and potential for blockchain technology in the financial sector.