Clearstream Joins ECB Trials for Tokenized Securities

Clearstream, a subsidiary of Deutsche Börse Group, will be participating in the European Central Bank (ECB) trials of digital euro wholesale central bank digital currency (CBDC). As the only Central Securities Depository (CSD) involved in the initial phase of the trials, Clearstream is set to test the use of distributed ledger technology (DLT) for wholesale transactions with tokenized securities. The company will also establish connections with major digital payment solutions in the Eurosystem.

Clearstream operates the D7 post-trade platform and runs the LuxCSD in Luxembourg, a German CSD, as well as an international CSD. Jens Hachmeister, Head of Issuer Services and New Digital Markets at Clearstream, expressed the company’s intention to expand their D7 digital securities infrastructure by incorporating DLT components. They also aim to collaborate with three European central banks: Deutsche Bundesbank, Banca d’Italia, and Banque de France.

These trials, which will take place from May to November 2023, will focus on euro-denominated issuances and delivery-versus-payment (DvP) transactions using real central bank money. Clearstream has partnered with Google Cloud to enhance the capacities of the D7 platform. The tests will examine various use cases and payment models.

The European Central Bank initiated the preparatory phase of its digital euro research in October, following a two-year investigative phase. It released a vendor call for participants in January. Banca d’Italia and Deutsche Bundesbank have already begun employing similar DLT technology.

Clearstream, with over 18 trillion euros in assets under custody, has been actively involved in exploring central bank digital currencies and tokenized assets. In 2022, the company participated in SWIFT experiments with CBDC and tokenized assets.

It is important to note that a decision regarding the launch of a digital euro will be made only after the completion of the ECB trials and the adoption of relevant legislation. The global usage of tokenized securities is rapidly increasing, as evidenced by the growth of the market for tokenized U.S. Treasury bonds in the United States, which surged from $114 million to $845 million in 2021.