Today the Deutsche Bundesbank announced a successful test with the Deutsche Börse for settling distributed ledger technology (DLT) securities transactions using the TARGET2 real-time gross settlement system (RTGS). Using a trigger mechanism, an atomic transaction was made, meaning the central bank payment and securities were exchanged simultaneously in a delivery versus payment (DvP) transaction.
The desire to enable on-chain settlement of DLT securities transactions is a key driver behind the demand for a wholesale central bank digital currency (CBDC). Hence if such a non-CBDC bridge can reliably work at scale, the demand for a wholesale CBDC becomes less pressing.
Talking at a Bank for International Settlements conference earlier this week, Jens Weidmann, President of the Deutsche Bundesbank, spoke about the test in the context of a wholesale CBDC.
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