Deutsche Bundesbank experiments with Trigger Solution for DLT transactions

Bundesbank explores interoperability of DLT solutions for central bank money settlement.

Innovation in central finance
The Deutsche Bundesbank has launched a series of experiments with its Trigger Solution, an innovative system designed to link DLT (Distributed Ledger Technology) platforms with the traditional TARGET payment system. These experiments, which will take place between May and November 2024, involve various market participants and aim to test the interoperability of DLT solutions for settling central bank money transactions.

Objectives of the experiments
Among the main goals of the trials are the issuance of digital bonds and the execution of smart derivatives contracts. The Bundesbank is trying to understand how these new technologies can integrate with existing systems and improve the efficiency of wholesale transactions.

Participants and preliminary results
The trials involved leading institutions such as DekaBank and Sparkasse Dortmund, which issued digital bonds, and DZ BANK, which executed smart derivatives contracts. The transactions were carried out in test environments, leading to actual entries in Real-Time Gross Settlement (RTGS) accounts in TARGET. This represents a significant step toward the adoption of DLT technologies in banking.

Strategic collaborations
In addition to DekaBank and Sparkasse Dortmund, institutions such as Commerzbank, Deutsche Bank, and J.P. Morgan have also participated in these trials. The collaboration among these entities demonstrates the growing interest in the industry in adopting innovative solutions that can improve liquidity and security of transactions.

Future implications
If these trials prove successful, they could pave the way for wider adoption of DLT technologies in the mainstream financial system. This raises important questions: Will central banks be ready to integrate these technologies into their systems? How will markets react to these innovations? The answer to these questions could have a significant impact on the future of financial transactions and the stability of the banking system.

Conclusion
The Deutsche Bundesbank is thus charting an interesting path toward innovation in the banking sector. Trials with the Trigger Solution represent an important step toward integrating DLT technologies into the traditional payment system. Stay tuned for further updates on this crucial topic.