The European Central Bank (ECB) stated that the eurozone monetary authority is studying possible solutions to allow central bank money to settle wholesale transactions on distributed ledger technology (DLT) platforms.

ECB to Set Up a Dedicated Entity to Support Wholesale CBDC Investigations

The Eurosystem, the collective of European Union (EU) member states that use the euro as the official currency, is exploring ways of “how wholesale financial transactions recorded on DLT platforms could be settled in central bank money,” the ECB wrote in the press release on Friday.

The move comes as the ECB doubles down on Eurosystem’s ongoing work in this space and looks to learn how different solutions can streamline the interaction between TARGET services and DLT platforms. TARGET services refer to a range of services developed by the Eurosystem that are settled in central bank money.

The ECB is considering launching a retail central bank digital currency (CBDC) that EU citizens and traders would use. However, the bank also intends to keep pace with wholesale financial markets developments, such as DLT and blockchain technologies.

In addition, the ECB said it plans to establish a dedicated market contact group to aid Eurosystem in its exploratory studies. This new entity will offer “expert input and keep the Eurosystem abreast of advances in the use of DLT and other new technologies in wholesale financial markets,” the bank added in the announcement.

Digital Euro Investigation Phase to Conclude This Year

According to ECB’s official website, the European central bank is still pondering whether to issue a CBDC – a digital version of the euro that would provide euro-area citizens an extra option to make payments. Meanwhile, several other global central banks continue to make significant progress in this area.

The ECB believes a digital euro could further stabilize the bloc’s payment and monetary system amid growing demand for reliable and secure electronic payment methods. ECB announced the 2-year investigation phase for this project in October 2021, which means that exploratory work is expected to conclude in October 2023.

Last week, European lawmakers approved regulations to establish harmonized rules for digital assets in the EU, known as the Markets in Crypto Assets (MiCA). The law, primarily welcomed by the crypto community, was proposed and approved to protect users from risks highlighted by FTX and LUNA collapses.

This article originally appeared on The Tokenist

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