The distributed ledger technology might help integrate the European financial market and to build a unified system of securities emittance and instant settlement payments.
The proposal was made by Yves Mersch, a member of the Executive Board of the European Central Bank, at the conference “Into the future: Europe’s digital integrated market”, which took place on 31 January in Frankfurt.
“A European securities market should offer the possibility of issuing, settling and holding securities in the same way, regardless of where issuers and investors are located,” Merschsaid.
According to the official, in the near term, the volume of securities transactions is expected to increase significantly due to the introduction of a new platform for securities settlement T2S (Target2-Securities) in 2015. According to the framework agreement between Central Securities Depositories and the Eurosystem, the transition to the T2S platform is carried through in four phases starting from June 2015 until February 2017. Three stages have already been completed. The transition of German market to the T2S platform is scheduled for the next week. According to ECB, the securities transaction volume may increase by up to 90%.
In addition, Mersch noted that the creation of a single securities issuance system would help reduce transaction costs and make the European market more attractive on the world stage. The main difficulty on the way to this goal is still existing fragmentation of the financial market in Europe.
“It may be worth exploring the establishment of a truly European issuance service – at least for some supranational debt instruments. We could even think about the ECB/Eurosystem playing an active role in setting up such an issuance service. And we could consider whether and to what extent new technologies, like distributed ledger technology (DLT), can be used in that process,” Mersch suggested.
