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The Swiss National Bank's Thomas Moser was one of the authors of a paper on the options for designing CBDCs using distributed ledger technology (DLT). It analyzes the various structures for implementation offered by DLT - public, permissioned and private - and the implications that each has for the central bank and the existing financial system. While a CBDC built on an open, permissionless system would provide the full functionality offered by DLT, it is also far more disruptive to the existing financial system and consequently requires more new infrastructure on the part of the central bank. Within the current DLT landscape, public-private partnerships offer the most practical and efficient means of building a DLT-based CBDC. A selection of existing DLT providers able to support a CBDC is also discussed.

The Banca d'Italia published a paper that evaluates two solutions for synchronizing the asset-leg and the cash-leg of a DvP (delivery versus payment) transaction on distributed ledger technology (DLT) rails. Both use the Target Instant Payment Settlement (TIPS) platform to provide the settlement services of the cash leg. The experiments showed that the proposed implementations can effectively contribute to safer and more efficient settlement of DvP trades, enabling interoperability with a wide array of DLT platforms, and different degrees of integration effort compared to other already established approaches. The implemented solutions preserve the atomic nature of a DvP transaction, building a "bridge" between the DLT asset management platform and the central bank payment system. In accomplishing this task, this architecture offers the potential to standardize communications with DLTs and, crucially, avoid the need to issue central bank money as cash tokens on DLTs - a key point of other approaches - thus preserving the central bank's control over the cash-leg of the DvP.

The Reserve Bank of India Innovation Hub (RBIH) conducted a successful interoperable distributed ledger technology (DLT) platform proof-of-concept exercise with 11 banks, DLT fabric partners, DLT application layer partners, and fintech startups. Inland Letter of Credit was chosen as the use case, because its end-to-end flows is paper intensive, time consuming, requires human intervention at multiple level, and prone to fraud. DLT allowed stakeholders to digitally share accurate and reliable trade information in real-time. Smart contracts supported by DLT, allowed for automated execution of payments on meeting pre-set conditions of the contract.

The World Federation of Exchanges (WFE) published a paper on the causal relationship between distributed ledger technology (DLT) settlement latency and market quality in the cryptocurrency domain. Focusing solely on public permissionless DLT networks, it finds that settlement latency significantly lowers liquidity and increases transaction costs. In addition, through the Huang and Stoll (1997) spread decomposition, we document that DLT settlement latency reduces the adverse selection costs and increases the inventory management costs faced by liquidity suppliers. Moreover, these effects are more pronounced in smaller trading venues and for the native cryptocurrency of the settlement blockchain. More broadly, this paper highlights the balance between decentralized, near-instantaneous settlement cycles offered by DLT and the potential adverse impacts on market quality.

The European Central Bank published a report on the use of distributed ledger technology (DLT) in securities post-trade processes. It categorises securities issuance and post-trade processes into models depending on how DLT is used in each case, drawing implications for the use of DLT at different stages of the securities life cycle, from issuance to custody and settlement. It recommends that, in order to prevent market fragmentation, the adoption of DLT-based solutions should be based on common practices and standards that enable DLT systems to interact with both each other and conventional systems.

The IMF published a paper that explores the similarities and differences between distributed ledger technology (DLT) based tokens and traditional legal instruments in commercial law, and how such tokens could offer superior solutions. However, to get there the law should recognize and define DLT and smart contracts to include them within existing legal mechanisms and recognize their effects in transferring tokens and generating rights for parties. In this regard, it is critical to ensure that there is a connection with valid legal effects between DLT and off-line assets and services. In addition, it is necessary to establish rules that allow the use of DLT as evidence, and resolve issues of unlawful transfer (loss, coercion, and fraud). Remedies must exist to protect the rights of legitimate token holders, but good faith acquirers for value must also be protected.

The BIS Innovation Hub (BISIH) published a report on Part II of its Project Polaris which focused on the risk and resilience aspects of CBDCs built on distributed ledger technology (DLT) based platforms. It analyses several notable DLT attacks in the decentralized finance (DeFi) domain, revealing that there are gaps in existing threat modelling techniques that may not adequately address the threats and associated security controls to properly protect CBDCs that make use of novel technology (e.g., DLT, smart contracts) from the tactics, techniques and procedures (TTPs) used by threat actors in the DeFi space. Additionally, the "mean time to attack" (based on the DLT attacks studied in this analysis) is around 10 months from the launch of a DeFi implementation and the successful compromise. Hence, CBDC issuers must be positioned to monitor and repel both well understood and novel TTPs.

"This analysis shows that permissioned and private ledgers form a subclass of Distributed Ledger Technologies (DLT), which are distinguished from the original blockchain. DLTs operate with databases known as "ledgers," copies of which are distributed among multiple nodes, but not anyone can create and validate new blocks of data in such a ledger; they are not decentralized. On the contrary, blockchain was designed as a decentralized, open, and competitive peer-to-peer system. The widespread misconception is to call any technology "blockchain" when it has some chunks of data connected through cryptographic hashes. The technology of creating a sequence of timestamped records connected with hashes is not new, it was designed in the early 90s, but nobody has ever called it "blockchain," as it has never dealt with decentralized consensus protocols and did not operate in a distributed network. Hence, not every chain of blocks is the blockchain. The paper dives into the details of various of DLTs and blockchains. It aims to bring rigor into terminology and academic discourse. It also raises the alarm on false expectations that may appear across industries and the public about a decentralization effect that some DLTs might not bring."

"A solely controlled DLT is centralized and therefore requires as much attention to cybersecurity as any other centralized technology. A consortium DLT is decentralized for its members, but will always be centralized for outside users (if, of course, the DLT is designed for public use). At the same time, the use of such a DLT can be fruitful in a private application among independent members, but be careful with objectives as it can be considered a cartel and questioned by antitrust bodies."

The European Securities and Markets Authority (ESMA) published its Report on the distributed ledger technology (DLT) pilot regime. It provides guidance on certain technical elements and makes recommendations on compensatory measures on supervisory data to ensure a consistent application by DLT market infrastructures from the start of the regime. The report presents ESMA's proposed way forward and concludes that there is no need to amend the regulatory technical standards (RTSs) on transparency and data reporting requirements before the DLT pilot starts applying in March 2023.

A Bank for International Settlements working paper concludes that financial law traditionally assumes that functions are concentrated in a single entity. Hence, the distribution of functions in distributed ledger technology (DLT) DLT with the need for additional agreements, ongoing coordination across, and governance arrangements among each participant. Further, in a cross-border context, multiple regulators and courts of various countries will be involved. All of these must decide whether for compliance with the law and regulations they look at DLT as a whole ('ledger perspective') or each individual DLT participant ('node perspective'). On that basis the paper analyzes the extent to which the ledger or the node perspective should prevail.

The Swiss Federal Council has initiated a public consultation on the adaptation of specific federal law provisions to developments in DLT and blockchain, after publishing a very comprehensive report on DLT and blockchain in last December. http://www.mll-legal.com/news-events/news/details/crypto-nation-switzerland-moves-forward-fast-swiss-government-proposes-dlt-uncertificated-rights-wi/

The Deutsche Bundesbank and Deutsche Börse have presented the results of a concept study on the use of distributed ledger technology (DLT) in the area of collateral management. This study outlines that, in principle, DLT is capable of delivering further benefits in terms of the velocity and usability of collateral. The two institutions are thus continuing their successful cooperation in researching the capabilities offered by securities settlement based on DLT technology.

The Governor of Bangko Sentral ng Pilipinas (BSP) reportedly expects to put in place within the next two years a wholesale central bank digital currency (CBDC). However, blockchain or distributed ledger technology (DLT) won't be used, which brings into question whether it is a "wholesale CBDC". Market convention defines a retail CBDC as being technology agnostic (it can be DLT-based or not), but it defines wholesale CBDC as being DLT-based. Otherwise, every non-DLT central bank-run digital payment system (e.g., real-time gross settlement systems) would be on the list of wholesale CBDC projects.

The Governor of the Banque de France, proposed a pan European DLT infrastructure. It would support CBDC and tokenised bank deposits to settle transactions for DLT-based tokenized assets on the same network. It acknowledged the concept is echoed in the BIS's recent paper on a 'game changing' Unified Ledger and the IMF's XC concept for cross border payments. https://www.banque-france.fr/en/intervention/regulation-and-innovation-yin-and-yang-financial-sector

According to European Central Bank (ECB) executive board member Fabio Panetta, the ECB is looking at the potential of DLT in improving the efficiency of interbank settlements. However, after listing the many benefits of DLT, Panetta highlighted some drawbacks, and made a case for a system that builds on the ECB's existing infrastructure for wholesale settlements, instead of building a new one based entirely on DLT.

The European Securities and Markets Authority (ESMA) says there is no need for new regulatory technical standards before the start of the European Union's distributed ledger technology (DLT) pilot regime in March 2023. The regime aims to reduce the regulatory burden to enable blockchain-based securities trading and settlement to be trialed at scale and provide legal certainty. Tokenized stocks, bonds and investment funds fall within the DLT Pilot regime and have monetary limits.

In April the South African Reserve Bank (SARB) announced the results of the second phase of its Project Khoka 2 (PK2) wholesale central bank digital currency (CBDC) trial, Project Khokha 2, which commenced in February 2021. PK2 explored the impact of distributed ledger technology (DLT) on trading, clearing and settlement by issuing a SARB debenture on a DLT network and enabling two DLT-based payment options in the form of a wholesale CBDC (wCBDC) token and a wholesale digital settlement token (wToken). There was one network where the wCBDC was issued and a second one - the Khokha Hub, where the wToken and tokenized bond were issued and traded. A bridge was used to port the wCBDC to the second network to settle the primary bond issuance transaction.

The Bank of Korea and Korea Exchange signed an agreement to collaborate in exploring distributed ledger technology (DLT) and central bank digital currency (CBDC) for carbon trading. Simulated trials will take place in the third and fourth quarters of 2024. Both organizations already have related programs. The Korea Exchange is currently conducting simulated DLT experiments and plans to support listed security tokens next year. The central bank said this trial would form part of its CBDC usability tests. However, both the exchange and central bank emphasized this is just a test. It will not impact the functioning of current carbon credit markets. http://www.bok.or.kr/portal/bbs/P0000559/view.do?menuNo=200690&nttId=10080261&pageIndex=1

The Swiss National Bank clarified the criteria for allowing distributed ledger technology (DLT) trading facilities to access to the Swiss Interbank Clearing (SIC) payment system, to enable atomic securities settlement. This simultaneous exchange of a tokenized asset for cash ideally requires access to the payment system and an account at the central bank. Last year new legislation came into force that created a "DLT trading facility"  license in the Financial Market Infrastructure Act (FinMIA), without which separate licenses would be needed for trading versus custody and settlement. DLT trading facilities that use SIC are expected to have a central bank account or "sight deposit".