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The European Central Bank (ECB) published the list of the first institutions to participate in its trials of the settlement of wholesale transactions on distributed ledger technology (DLT) based platforms using central bank money. The list is comprised of five central banks, ten institutions, six market DLT operators and five central banks. The trials will involve real transactions as well as mock simulations, with most of the tests focusing on securities settlement. There also plans to consider use cases for payment versus payment (FX) and cross border payment. Three settlement solutions are part of the trials, provided by the central banks of Germany (RTGS-based "trigger" solution), France (wholesale central bank digital currency (CBDC) solution) and Italy (TIPS Hashlink solution). https://www.ecb.europa.eu/press/intro/news/html/ecb.mipnews240403.en.html

Clearstream, Deutsche Börse Group's post-trade business, joins the European Central Bank (ECB) trials and experiments, aimed at exploring the potential of distributed-ledger technology (DLT) for wholesale central bank money settlement. Clearstream aims to assess the feasibility of using DLT for wholesale transaction processing, using tokenized securities, including conducting euro-denominated issuance and delivery-versus-payment (DvP) transactions across different use-cases and payment models. Three solutions will be tested by the central banks of Germany (Trigger solution), France (wholesale central bank digital currency (CBDC)) and Italy (TIPS Hashlink).

The Bank for International Settlements (BIS) announced the first batch of six new projects in its 2024 Innovation Hub work program including experimentations on digital payments cyber security and central bank digital currencies (CBDCs). Project Leap starts its phase II, aiming to "quantum-proof" payment systems, after successfully establishing a quantum-safe communication channel between the central banks of France and Germany in its first phase. Project Aurum enters a new phase in which it will study the privacy of payments in retail CBDCs. The recently started Project Promissa tests the feasibility of tokenizing promissory notes, financial instruments that help fund multilateral development banks and other international financial institutions. All these new initiatives will be added to existing projects that various Innovation Hub Centres will continue to develop this year:  FuSSE, Gaia, Mandala, mBridge phase III, Nexus phase III, Pyxtrial, Rio and Viridis. https://www.bis.org/about/bisih/about.htm

Germany reinsurer Hannover Re has collaborated with Schroders Capital on a pilot tokenization project, designed to enhance the way insurance-linked securities are invested and managed. On an internal-only basis, Schroders successfully enabled reinsurance contracts to be tokenized and traded on a public blockchain platform using smart contracts. This allowed a number of time-consuming processes to be automated. For example, by integrating key catastrophe insurance data sources into the smart contracts payments to appropriate recipients could be automatically triggered if qualifying natural disaster events occurred. [Source: Artemis.bm]

Börse Stuttgart has listed two crypto exchange-traded notes based on XRP and litecoin and traded against the Swedish krona and euro.

PayPal launched Xoom-its international money transfer service-in 32 markets across Europe.

ECB board member Benoit Coeure said Libra has revived efforts to widen the uptake of the ECB-backed TIPs fast cash project, and that the ECB needs to step up its thinking on a central bank digital currency.

Germany's financial regulator has released guidelines classifying crypto as financial instruments. This move further expands the definition of financial instruments to include all kinds of digital assets with the previous paradigm only covering security tokens.

While more than 40 banks have reportedly expressed interest in Germany's new crypto custody license, those firms may still have to put up with an anti-crypto sentiment among German banks.

The German finance ministry has unveiled a reform of financial regulation in the country in the wake of the Wirecard scandal. The Federal Financial Supervisory Authority (BaFin) will be given further powers, including the right to get information from third parties and conduct ad-hoc and suspicion-based inspections to be financed by the companies concerned. Companies would be obliged to replace their auditor every ten years, and accounting firms to establish a stricter separation between their auditing and consulting services and be subject to higher liability for breaches of duty. https://www.bundesfinanzministerium.de/Content/EN/Standardartikel/Topics/Financial_markets/Articles/2020-10-09-combating-financial-reporting-fraud-strengthening-controls-financial-markets.html

The German Federal Office for Information Security (BSI) published a technical guideline (TR) describing requirements that ensure a high level of IT security for the backend systems that support the operation of a central bank digital currency (CBDC) ecosystem. The CBDC ecosystem consists of the backend systems operated by the central bank, the frontend functionality made available to end users by wallet providers, exchange points, which may be operated by third parties other than the central bank, and, potentially, additional service providers. If implemented, the CBDC ecosystem constitutes a critical infrastructure, and the TR aims to ensure that it is made resilient to a wide range of attacks. In addition to implementing the goal of security-by-design, this TR also considers some privacy aspects.

How long do payments via different payment methods take? This question was analyzed in an interesting research by Deutsche Bundesbank (BuBa). The result: The quickest payments are smartphones/smartwatch payments (14 seconds), followed by contactless card payments (15.2 seconds), and cash payments (18.7 seconds).

"One of the oldest banks in the world, Bankhaus von der Heydt, has issued a Euro stablecoin on the Stellar blockchain network."

The Deutsche Bundesbank will work with the Massachusetts Institute of Technology's Digital Currency Initiative (MIT DCI) to investigate pivotal CBDC design questions, such as the implementation of data protection and privacy. Deutsche Bundesbank President Dr. Joachim Nagel said that the Eurosystem would not have access to digital euro users' personal information, and that consumers should have more control over their personal data. https://www.bundesbank.de/en/press/speeches/digital-euro-vision-advances-and-challenges-929800

The Boerse Stuttgart Group (BSG) will be part of the second wave of the European Central Bank (ECB) European Union-wide wholesale DLT trials for central bank money settlement. Commerzbank, Deutsche Bank, DZ Bank, LBBW, Bankhaus Metzler and V-Bank, who are directly connected to the Bourse's new blockchain-based settlement solution, will act as trading and settlement participants to test the settlement of exchange transactions with tokenized securities against central bank money. The Deutsche Bundesbank is providing its trigger solution, which connects blockchain transactions with the traditional euro payment system, for the test.