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Tokeny Solutions Explores Digital Currency with European Banks

After its active participation last week at the 2nd National Risk Assement with the SICCFIN in Monaco, the Luxembourg-Monegasque company Tokeny Solutions is announcing its collaboration with European banks to explore the potential of digital interbank currency.

BNP Paribas CIB, CA CIB, Caisse des Dépôts, Tokeny Solutions and The Blockchain XDEV just announced the launch of a project by combining their expertise to explore the potential use and implications of a creation of an interbank digital currency for use on Distributed Ledger Technology (DLT) platforms.

“The project will explore how financial transactions involving digital assets can be settled on platforms initially using Ethereum and Tezos technologies. Participants will consider particularly the implications of ‘atomic’ delivery-versus-payment settlement of tokens or regulated securities exchanged on a blockchain – where security tokens and the cash tokens exist on the same ledger” says the press release.

The acronym DvP (Delivery versus Payment) is referring to a guaranteed transfer of securities, financial instrument, or ownership of an asset right after that payment has been made, meaning that from buyer’s perspective, the cash payment for the securities must be made prior or simultaneously to the delivery of the security.

As of now, the DvP is made by Custodian Agents and enabled with the help of different messaging protocols. The transaction goes through various systems that are not atomically linked which is a potential door open to eventual fraud, mistake, or default of any kind.

Smart contracts on Blockchain could have been one of possible solutions, but environment of those transactions would have to be much more homogeneous than what reality of financial securities exchanges are (currencies, private or public blockchains…)

And considering the growing expectation of banks and central banks to increase and secure the level of assets and currencies exchanges, DvP is definitely an issue to be addressed.

The framework of this common project between Tokeny Solutions and European banks targets to generate “atomic” DvP transactions – of tokens or traditional securities – efficient on heterogeneous networks in the perspective a European interbank Digital Currency.

“The stakeholders will consider the operational impacts of this technology including the implementation of several experimentations to validate the technological interoperability of such a tool in a multi-technology context, both on public or private blockchains and the regulatory impacts on a daily situation of multi-currency and multi-actor transactions in financial markets. Participants in this project are committed to comply with the applicable regulations and contribute to the on-going EU exploratory work in the area of digitalization of financial asset.”

The partners participating to this experimentation are aiming to federate the largest number possible of French, European and international players wishing to participate in the construction of an infrastructure and its components. The project will be completed in 2021.

Article: Joana Foglia – Source: Tokeny Solutions

Post Author: Wealth Monaco