Clearstream among pioneers of the digital euro: What does it mean for the financial market?

Clearstream Joins European Central Bank’s Efforts on Digital Euro

Clearstream, a subsidiary of Deutsche Börse Group, is actively participating in the European Central Bank’s trials on the digital euro as the wholesale central bank digital currency (CBDC). It is the only Central Securities Depository (CSD) taking part in the initial phase of the ECB’s “preparatory experiments.”

Expansion of D7 Infrastructure for Digital Securities

Clearstream is focusing on expanding the D7 infrastructure for digital securities, utilizing Distributed Ledger Technology (DLT) and integrating with major digital payment solutions within the Eurosystem. Collaboration with Google Cloud will enhance the capabilities of D7, with planned DLT tests involving wholesale transactions with tokenized securities.

Euro-Denominated Issuance and DvP Transaction Tests

Clearstream will conduct tests on euro-denominated issuance and delivery-versus-payment (DvP) transactions across various use cases and payment models. The tests are expected to run from May to November of the current year and will involve actual central bank money.

Preparatory Phase of ECB’s Research on Digital Euro

The ECB initiated the preparatory phase of research on the digital euro in October, following a two-year research phase, and issued a call for service providers in January. Banca d’Italia and Deutsche Bundesbank have also begun work with similar DLT technology in 2021. With over 18 trillion euros in assets under custody, Clearstream plays a crucial role in these experimental initiatives.

Development of Tokenized Securities Market

The market for tokenized securities is rapidly growing globally. For example, in the United States, the market related to tokenized treasury bonds increased from $114 million to $845 million last year, indicating a growing interest and trust in innovative financial solutions.

A decision on the launch of the digital euro will only be made after the conclusion of the ECB’s trials and the establishment of appropriate regulations, highlighting a cautious approach to potential changes in the financial sector.