The Association for Financial Markets in Europe (AFME) welcomes the European Central Bank (ECB)’s announcement that it will be moving forward with the implementation of an interoperability solution that makes possible the settlement of DLT-based transactions in central-bank money in the shortest feasible timeframe.

AFME supports linking the solution to existing Target infrastructure, as this would ensure the most substantial degree of legal certainty and enables swift implementation and adoption by market participants. In its further work on the interoperability solution, AFME calls on the ECB to also take serious account of other important considerations, in particular the ability of market participants to efficiently manage central bank reserves and avoid liquidity fragmentation.

James Kemp, Managing Director and Head of Technology and Operations at AFME, said: “The swift implementation of an interoperability solution will serve as an important enabler to the further scaling of DLT-based capital markets in Europe and is key in supporting Europe’s leadership position in DLT adoption”.

In addition to enabling settlement in central bank money, AFME also emphasis the need for the ECB to review its collateral eligibility framework in a way that allows DLT-based securities to serve a collateral in ECB credit operations. Such an inclusion is vital to further unlocking market liquidity and adoption of DLT-based securities.

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