ECB trials in review: Perspectives from the DACH region
04 March 2025
In the first of two articles, Daniel Tison invites Clearstream, DekaBank, and the ValueExchange to share their key findings and future visions, following the completion of the ECB DLT trials and experiments
Image: stock.adobe.com/ImageSine
The European Central Bank (ECB) has completed what is potentially the most ambitious distributed ledger technology (DLT) experimentation programme in the world to date. Bringing together 64 entities, including three central banks, to explore how DLT could be used to improve the settlement of tokenised securities and cash, the trials executed more than 200 trades, processing over €1.6 billion in issuance.
According to Barnaby Nelson, CEO of the ValueExchange (VX), the ECB DLT trials and experiments turned out to be “really significant” in terms of size and scale. His organisation has closely monitored the initiative, gathering feedback from 32 participating firms. To Nelson, the results reflect not just the scale of the project, but its transformative potential for European financial infrastructure.
He exclaims: “You’ve got 60 of the biggest organisations in Europe who are, instead of thinking about it, they’re all doing it now, which is super exciting!”
A report on the ECB DLT trials and experiments (commonly known as ‘ECB trials’), which the VX produced in partnership with Clearstream in January, says the exploratory work moved most participants from beginners to intermediate, in terms of experience and expertise in DLT, and what would have taken years otherwise, was achieved within only a few months.
Step by step
From May to November 2024, three central banks – Bundesbank, Banca d’Italia, and Banque de France – worked alongside a broad coalition of financial institutions and fintech firms to simulate live transactions. According to the VX report, the size and diversity of participants ensured a thorough assessment of how DLT could operate within Europe’s existing financial framework.
The initiative was designed to test the viability of using tokenised assets in different payment environments, focusing on key use cases such as real-time collateral management and margining. While the trials included actual settlement in central bank money, the experiments worked with mock settlement.
Deutsche Börse Group participated in the exploratory work through a number of its entities, such as Clearstream, Eurex, and LuxCSD.
Clearstream joined the ECB trials as a market DLT operator with its digital post-trade platform D7 and all three of its central securities depositories (CSDs), covering the domestic markets in Germany and Luxembourg, as well as the international market with its international central securities depository (ICSD). During the exploratory work, Clearstream took part in 10 different use cases, including commercial papers, securities, and repos.
Thilo Derenbach, head of sales and business development for digital securities at Clearstream, explains: “We did so because we wanted to make sure that we experience the trials in the broadest possible way. We wanted to give all of our clients the possibility to participate because if we had participated with only one of our three CSDs, some clients would have been left out of the opportunity. More importantly, though, we wanted to trial all three payment solutions that were offered, and give our clients all options.”
Several transactions were executed through a Frankfurt-based fintech SWIAT, a joint venture of DekaBank, Landesbank Baden-Württemberg (LBBW), and SC Ventures. Notable transactions included a €300 million digital bond with Siemens, and digital bonds with the state of Saxony-Anhalt and KfW. DekaBank also conducted repo transactions with LBBW and NatWest using both digital and traditional securities.
Experimentation was divided into two phases – each with a distinct focus and objectives. Wave 1, running from May 2024, focused on the initial testing and feasibility of DLT for issuing and settling tokenised securities. Participants worked on integrating DLT platforms with existing systems, testing basic functionality, and assessing the viability of various digital cash mechanisms, including central bank digital currency (CBDC), commercial bank money, and tokenised money.
The first experiment, carried out by the Austrian National Bank (Oesterreichische Nationalbank), covered the tokenisation and simulated delivery-versus-payment (DvP) settlement of government bonds in a secondary market transaction against central bank money.
Wave 2 started in July 2024 in parallel with the first wave, exploring advanced use cases, particularly in collateral management and margining. Trials in this phase demonstrated how DLT could enable real-time, 24/7 access to tokenised assets, significantly improving liquidity management and operational efficiency.
This kicked off with Clearstream, DekaBank, and DZ Bank jointly issuing two tokenised €5 million bonds using DLT. According to Clearstream, the transactions marked the first institutional-grade issuances in Germany on DLT using wholesale digital central bank money.
In October, Clearstream jointly processed a set of cleared repo transactions using DLT, along with ABN Amro Bank, ABN Amro Clearing, Rabobank, Eurex Clearing, and Eurex Repo. The first set of repos were processed intraday, the second overnight. The basis for the repo transaction was a tokenised eurobond/commercial paper issued by ABN Amro Bank.
In November, Clearstream and Intesa Sanpaolo jointly issued and distributed a commercial paper using DLT. For the transactions of €10 million, participants used the TIPS Hash Link solution of Banca d’Italia, the Italian central bank.
Winning the battle, but not the war
Reflecting on Clearstream’s participation in the initiative, Derenbach comments: “We were very positively surprised by the level of engagement by the central banks that joined and by the outcomes of the use cases, primarily in the sense of speed and efficiencies. All of the use cases and all of the payment solutions worked equally well.”
He notes that the trials and experiments were an opportunity to learn about security tokenisation and triggering cash processes on-chain, but also about the relevance and importance of CCPs in this space.
Michael Cyrus, head of collateral trading, foreign exchange, and digital assets at DekaBank, shares this enthusiasm: “The key takeaways from the ECB trials are that they were successful and the Bundesbank's trigger solution works very well — it is transparent and easy, and ready to use. Central bank money is important for wholesale securities transactions, and it is fantastic to see that the central banks are ready for the challenge."
He adds that shortening settlement times from several days to within the same day, using products like registered bonds, reduced counterparty risk, but many banking systems are not ready for this yet.
“We also learned that while central bank money is important, we need commercial bank money on the blockchain too,” says Cyrus. “Ideally, we would have securities, cash, and derivatives on the blockchain for better efficiency. Thereby, we would also create a reliable data source. The idea would be to have a unified ledger and a dynamic, decentralised golden source of data.”
One of the most critical outcomes of the exploratory work was the confirmation that Europe’s three digital cash mechanisms — central bank money, commercial bank money, and tokenised money — are all ready for large-scale implementation. The success of these mechanisms paves the way for broader adoption of DLT across the European financial system, bringing the region one step closer to a fully digital financial infrastructure.
Cyrus believes that DLT can be used for both traditional and digital native securities. In securities lending, this could mean delivery versus delivery, while the currently, both securities legs are effected independently, ie free of payment. However, the real benefits of DLT are seen with digital assets.
He explains: “A tokenised money market fund allows you to redeem shares anytime. However, if the underlying securities still have standard settlement times, this could cause discrepancies. Ideally, digital native assets would allow all transactions to settle instantly, or at least have the option to do so. The idea would be that all parts of the value chain are fully digitised.”
An enormous desire to keep going
The momentum generated by the ECB trials is clear, according to the ValueExchange report. More than 80 per cent of participants in the survey expressed a strong desire to see the trials continue into 2025, with many firms now focused on commercialising their connectivity to central bank digital infrastructure.
“The feedback has already been very clearly understood by the Eurosystem and by the three central banks that there is an enormous desire to keep going,” says Nelson. “People have spent a lot of money last year doing these trials, so they need to see ROI on that by doing a second trade.”
He would like to see more OTC swaps and bilateral collateral exchanges in the next phase, bringing big asset owners and collateral takers into the game.
In contrast, Cyrus would like to create more cash or cash-near solutions for the DLT sector. This includes central bank money to reduce counterparty risks, he explains, commercial bank money for those comfortable with bank risks, and money market tokens for those who want to store their money safely and with a yield pick-up.
“If participants only have central bank money or stablecoins, they might withdraw money from the DLT to get better returns,” says Cyrus. “Current DLT networks for banks find it difficult to retain cash on their platforms because it is not attractive. Therefore, tokenised money market solutions are important to keep cash on the blockchain and make it fully interchangeable with central bank money, commercial bank money, and digital assets. This will help enormously in the development of a DLT-based digital financial ecosystem."
Looking ahead, Derenbach anticipates: “Is DLT going to be applicable across the industry already in 2025? Unlikely, but market participants will start using it next to the traditional rails. I expect payment solutions to be a focus topic in 2025, especially if the ECB reopens the gates for the payment solutions on-chain.
“We’re looking forward to having proper delivery-versus-payment transactions being processed structurally and in high numbers also on-chain. It’s interesting and beneficial to have cash and securities in the same ecosystem, and we have that in the traditional world, but we look to elevate that also onto the blockchain.”
However, he also cautions against the assumption that tokenised securities will scale rapidly once cash on chain becomes widely available. While he acknowledges that digital cash is a crucial building block, he argues that other key components — such as efficient collateral management tools, securities lending capabilities, and interoperability between blockchain networks — are still missing. Until these gaps are closed, institutional adoption of tokenised securities will remain limited.
On that note, Cyrus adds: “Tokenisation and digitisation alone do not create secondary market liquidity. Liquidity comes from the interaction of many players like market makers, issuers, investors, and trading platforms, with central bank support. We still have work to do in this area.”
His vision is to create a decentralised, unified ledger with cash, near-cash, digital assets, and derivatives based on a dynamic, reliable source of data, which would allow for netting benefits with respect to capital, liquidity, and balance sheet usage.
“Once this is achieved, we could expect a ChatGPT moment for DLT,” he states. “We also aim to have more issuers, more investors, and marketplaces to create liquid, digital markets.”
According to Barnaby Nelson, CEO of the ValueExchange (VX), the ECB DLT trials and experiments turned out to be “really significant” in terms of size and scale. His organisation has closely monitored the initiative, gathering feedback from 32 participating firms. To Nelson, the results reflect not just the scale of the project, but its transformative potential for European financial infrastructure.
He exclaims: “You’ve got 60 of the biggest organisations in Europe who are, instead of thinking about it, they’re all doing it now, which is super exciting!”
A report on the ECB DLT trials and experiments (commonly known as ‘ECB trials’), which the VX produced in partnership with Clearstream in January, says the exploratory work moved most participants from beginners to intermediate, in terms of experience and expertise in DLT, and what would have taken years otherwise, was achieved within only a few months.
Step by step
From May to November 2024, three central banks – Bundesbank, Banca d’Italia, and Banque de France – worked alongside a broad coalition of financial institutions and fintech firms to simulate live transactions. According to the VX report, the size and diversity of participants ensured a thorough assessment of how DLT could operate within Europe’s existing financial framework.
The initiative was designed to test the viability of using tokenised assets in different payment environments, focusing on key use cases such as real-time collateral management and margining. While the trials included actual settlement in central bank money, the experiments worked with mock settlement.
Deutsche Börse Group participated in the exploratory work through a number of its entities, such as Clearstream, Eurex, and LuxCSD.
Clearstream joined the ECB trials as a market DLT operator with its digital post-trade platform D7 and all three of its central securities depositories (CSDs), covering the domestic markets in Germany and Luxembourg, as well as the international market with its international central securities depository (ICSD). During the exploratory work, Clearstream took part in 10 different use cases, including commercial papers, securities, and repos.
Thilo Derenbach, head of sales and business development for digital securities at Clearstream, explains: “We did so because we wanted to make sure that we experience the trials in the broadest possible way. We wanted to give all of our clients the possibility to participate because if we had participated with only one of our three CSDs, some clients would have been left out of the opportunity. More importantly, though, we wanted to trial all three payment solutions that were offered, and give our clients all options.”
Several transactions were executed through a Frankfurt-based fintech SWIAT, a joint venture of DekaBank, Landesbank Baden-Württemberg (LBBW), and SC Ventures. Notable transactions included a €300 million digital bond with Siemens, and digital bonds with the state of Saxony-Anhalt and KfW. DekaBank also conducted repo transactions with LBBW and NatWest using both digital and traditional securities.
Experimentation was divided into two phases – each with a distinct focus and objectives. Wave 1, running from May 2024, focused on the initial testing and feasibility of DLT for issuing and settling tokenised securities. Participants worked on integrating DLT platforms with existing systems, testing basic functionality, and assessing the viability of various digital cash mechanisms, including central bank digital currency (CBDC), commercial bank money, and tokenised money.
The first experiment, carried out by the Austrian National Bank (Oesterreichische Nationalbank), covered the tokenisation and simulated delivery-versus-payment (DvP) settlement of government bonds in a secondary market transaction against central bank money.
Wave 2 started in July 2024 in parallel with the first wave, exploring advanced use cases, particularly in collateral management and margining. Trials in this phase demonstrated how DLT could enable real-time, 24/7 access to tokenised assets, significantly improving liquidity management and operational efficiency.
This kicked off with Clearstream, DekaBank, and DZ Bank jointly issuing two tokenised €5 million bonds using DLT. According to Clearstream, the transactions marked the first institutional-grade issuances in Germany on DLT using wholesale digital central bank money.
In October, Clearstream jointly processed a set of cleared repo transactions using DLT, along with ABN Amro Bank, ABN Amro Clearing, Rabobank, Eurex Clearing, and Eurex Repo. The first set of repos were processed intraday, the second overnight. The basis for the repo transaction was a tokenised eurobond/commercial paper issued by ABN Amro Bank.
In November, Clearstream and Intesa Sanpaolo jointly issued and distributed a commercial paper using DLT. For the transactions of €10 million, participants used the TIPS Hash Link solution of Banca d’Italia, the Italian central bank.
Winning the battle, but not the war
Reflecting on Clearstream’s participation in the initiative, Derenbach comments: “We were very positively surprised by the level of engagement by the central banks that joined and by the outcomes of the use cases, primarily in the sense of speed and efficiencies. All of the use cases and all of the payment solutions worked equally well.”
He notes that the trials and experiments were an opportunity to learn about security tokenisation and triggering cash processes on-chain, but also about the relevance and importance of CCPs in this space.
Michael Cyrus, head of collateral trading, foreign exchange, and digital assets at DekaBank, shares this enthusiasm: “The key takeaways from the ECB trials are that they were successful and the Bundesbank's trigger solution works very well — it is transparent and easy, and ready to use. Central bank money is important for wholesale securities transactions, and it is fantastic to see that the central banks are ready for the challenge."
He adds that shortening settlement times from several days to within the same day, using products like registered bonds, reduced counterparty risk, but many banking systems are not ready for this yet.
“We also learned that while central bank money is important, we need commercial bank money on the blockchain too,” says Cyrus. “Ideally, we would have securities, cash, and derivatives on the blockchain for better efficiency. Thereby, we would also create a reliable data source. The idea would be to have a unified ledger and a dynamic, decentralised golden source of data.”
One of the most critical outcomes of the exploratory work was the confirmation that Europe’s three digital cash mechanisms — central bank money, commercial bank money, and tokenised money — are all ready for large-scale implementation. The success of these mechanisms paves the way for broader adoption of DLT across the European financial system, bringing the region one step closer to a fully digital financial infrastructure.
Cyrus believes that DLT can be used for both traditional and digital native securities. In securities lending, this could mean delivery versus delivery, while the currently, both securities legs are effected independently, ie free of payment. However, the real benefits of DLT are seen with digital assets.
He explains: “A tokenised money market fund allows you to redeem shares anytime. However, if the underlying securities still have standard settlement times, this could cause discrepancies. Ideally, digital native assets would allow all transactions to settle instantly, or at least have the option to do so. The idea would be that all parts of the value chain are fully digitised.”
An enormous desire to keep going
The momentum generated by the ECB trials is clear, according to the ValueExchange report. More than 80 per cent of participants in the survey expressed a strong desire to see the trials continue into 2025, with many firms now focused on commercialising their connectivity to central bank digital infrastructure.
“The feedback has already been very clearly understood by the Eurosystem and by the three central banks that there is an enormous desire to keep going,” says Nelson. “People have spent a lot of money last year doing these trials, so they need to see ROI on that by doing a second trade.”
He would like to see more OTC swaps and bilateral collateral exchanges in the next phase, bringing big asset owners and collateral takers into the game.
In contrast, Cyrus would like to create more cash or cash-near solutions for the DLT sector. This includes central bank money to reduce counterparty risks, he explains, commercial bank money for those comfortable with bank risks, and money market tokens for those who want to store their money safely and with a yield pick-up.
“If participants only have central bank money or stablecoins, they might withdraw money from the DLT to get better returns,” says Cyrus. “Current DLT networks for banks find it difficult to retain cash on their platforms because it is not attractive. Therefore, tokenised money market solutions are important to keep cash on the blockchain and make it fully interchangeable with central bank money, commercial bank money, and digital assets. This will help enormously in the development of a DLT-based digital financial ecosystem."
Looking ahead, Derenbach anticipates: “Is DLT going to be applicable across the industry already in 2025? Unlikely, but market participants will start using it next to the traditional rails. I expect payment solutions to be a focus topic in 2025, especially if the ECB reopens the gates for the payment solutions on-chain.
“We’re looking forward to having proper delivery-versus-payment transactions being processed structurally and in high numbers also on-chain. It’s interesting and beneficial to have cash and securities in the same ecosystem, and we have that in the traditional world, but we look to elevate that also onto the blockchain.”
However, he also cautions against the assumption that tokenised securities will scale rapidly once cash on chain becomes widely available. While he acknowledges that digital cash is a crucial building block, he argues that other key components — such as efficient collateral management tools, securities lending capabilities, and interoperability between blockchain networks — are still missing. Until these gaps are closed, institutional adoption of tokenised securities will remain limited.
On that note, Cyrus adds: “Tokenisation and digitisation alone do not create secondary market liquidity. Liquidity comes from the interaction of many players like market makers, issuers, investors, and trading platforms, with central bank support. We still have work to do in this area.”
His vision is to create a decentralised, unified ledger with cash, near-cash, digital assets, and derivatives based on a dynamic, reliable source of data, which would allow for netting benefits with respect to capital, liquidity, and balance sheet usage.
“Once this is achieved, we could expect a ChatGPT moment for DLT,” he states. “We also aim to have more issuers, more investors, and marketplaces to create liquid, digital markets.”
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