We are analysing two options. The first would entail creating a bridge between market DLT platforms and central bank infrastructures. [12] This would allow a securities transfer on a DLT platform to trigger settlement in central bank money. It is very likely that a solution that builds on the existing TARGET Services could be implemented more rapidly than a solution based entirely on DLT. Another option would be to create a new DLT-based wholesale settlement service with DLT-based central bank money. [13] The Eurosystem could, for instance, launch its own DLT platform for settlement in central bank money. [14] Alternatively, we could make central bank money available on DLT platforms operated by market stakeholders, allowing both cash and assets to be transferred there. In any event, implications for governance, settlement efficiency and liquidity management need to be carefully assessed. And the suitability of any of these options would depend on which use cases prevail in the market and whether or not the market consolidates around a limited number of DLT platforms. Conclusion The Eurosystem is committed to providing settlement in central bank money for wholesale transactions through infrastructures that are fit for purpose. Our role is to provide state-of-the-art infrastructures as a basis for private actors to develop their innovative services. These infrastructures can act as a catalyst for innovation within Europe and beyond. We are analysing whether new technologies for settling wholesale transactions could help us continue to play this role effectively.

But despite the uncertainties surrounding DLT’s potential, we want to be prepared for a scenario where market players adopt DLT for wholesale payments and securities settlement. We must ensure that, in such a scenario, central bank money would still retain its role as the settlement asset for wholesale transactions. If, for example, market players start to use DLT for securities settlement but face difficulties using TARGET Services[10], they may turn to alternatives like commercial bank money or stablecoins. This would entail a number of risks, such as central bank money having a reduced role in settlement processes, as well as trading and liquidity becoming fragmented. The result would be payments and securities settlement becoming less safe and less efficient, which would undermine financial stability. The use of stablecoins would magnify these risks. As we have seen in recent months, stablecoins are prone to runs. In other words, they are stable in name only. And allowing them to be fully backed with central bank money would effectively outsource the provision of central bank money to private entities, endangering monetary sovereignty. [11] A shift away from central bank settlement systems would also imply that authorities would lose direct access to settlement data. This could slow the speed of intervention in the event of settlement bottlenecks and impair the analysis of financial stability. The Eurosystem is therefore exploring ways in which market participants who adopt DLT could interact with the TARGET Services to settle the euro cash leg of their transactions in central bank money.