ABN AMRO Advances Digital Asset Innovation with Successful CBDC Repo Trials in Eurosystem Project

ABN AMRO Advances Digital Asset Innovation with Successful CBDC Repo Trials in Eurosystem Project

(IN BRIEF) ABN AMRO has successfully completed its second use case in the Eurosystem Central Bank Digital Currency (CBDC) trials, marking a significant step in exploring digital asset innovations. The bank executed four repo trades using central bank money settled through Distributed Ledger Technology (DLT), with tokenized commercial paper (CP) as collateral. This trial, part of the European Central Bank’s initiative, allows ABN AMRO to explore new ways of managing intraday liquidity and test the use of tokenized securities in real-world applications. The participation solidifies ABN AMRO’s position as a leader in the digital assets space, contributing to the development of a digital euro and blockchain-based financial systems.

(PRESS RELEASE) AMSTERDAM, 11-N0v-2024 — /EuropaWire/ — ABN AMRO has made significant strides in the evolving landscape of digital assets by successfully completing its second use case in the Eurosystem Central Bank Digital Currency (CBDC) trials. On 22 and 23 October, the bank executed four repo pilot trades, settling with central bank money through Distributed Ledger Technology (DLT). These trades utilized a tokenized commercial paper (CP) as collateral, marking another milestone in ABN AMRO’s efforts to explore the future of digital currency.

As part of the ongoing ECB-organized trials running from May to November 2024, ABN AMRO’s participation is aimed at enhancing its understanding of CBDC applications, advancing its digital capabilities throughout the securities lifecycle, and experimenting with new balance sheet management tools, including intraday liquidity management.

ABN AMRO at the Forefront of Digital Asset Innovation
With its active involvement in the Eurosystem trials, ABN AMRO has positioned itself as a leader in the development of digital assets and blockchain-based settlement in European financial markets. The trials provide institutions the opportunity to test euro central bank money settlement through DLT, paving the way for the future integration of digital currencies in everyday financial operations.

Sander Wever, Head of Money Markets and Securities Financing at ABN AMRO, commented, “Being the first Dutch bank to register a digital green bond on a public blockchain last year, we continue to strengthen our position in the digital asset space through the Eurosystem trials. These initiatives not only bolster our commercial offering but also contribute to shaping the future of digital euros and blockchain-based cash settlements. This trial has enabled us to explore new collateral types, such as tokenized commercial paper issued by ABN AMRO, and test innovative intraday liquidity solutions.”

Breaking Down Key Concepts: What’s Involved in the Repo Trades?
A repo (repurchase agreement) is a short-term loan where securities are sold with the agreement to repurchase them later at a slightly higher price. In ABN AMRO’s trial, the collateral was a tokenized commercial paper (CP) issued by the bank, which represents a digital asset stored on a blockchain.

A blockchain is a decentralized digital ledger that records transactions across multiple participants, utilizing Distributed Ledger Technology (DLT). Central Bank Digital Currency (CBDC) refers to central bank-issued money that exists digitally, and in this case, was issued by Banque de France in collaboration with De Nederlandsche Bank (DNB) for use in the trials.

Executing the Use Case
Earlier in October, ABN AMRO successfully issued its first tokenized CP on a private blockchain operated by Clearstream, settling the transaction with CBDC. This marked a significant achievement, as it was the first time the bank issued tokenized paper directly settled on a blockchain. Building on this, the second use case included four reverse repo transactions between ABN AMRO Bank, ABN AMRO Clearing, and Rabobank, all cleared by Eurex Clearing.

What set these transactions apart was the use of a tokenized commercial paper as collateral instead of traditional securities like government bonds, and the atomic settlement via CBDC instead of fiat money. This allowed ABN AMRO to test two intraday repos—a first for the bank—where securities were bought and sold on the same day, while the other two repos were conducted on an overnight basis.

Looking Ahead
Sander Wever emphasized, “The insights gained from the Eurosystem trials will further enhance ABN AMRO’s expertise in tokenization and DLT-based settlement. We are continuing to advance our tokenized securities initiatives, positioning ABN AMRO as a future-ready institution. As CBDC gains traction and becomes more widely available, ABN AMRO is preparing for its seamless integration into business-as-usual operations.”

This significant progress underscores ABN AMRO’s commitment to leading the way in the digital asset space, exploring new technologies that could reshape the financial landscape in the years to come.

Author/Media contact:

Jarco de Swart
Sr Press Officer Corporate Affairs, Finance, Legal and Sustainability
jarco.de.swart@nl.abnamro.com
+31 (0)20 6282160

SOURCE: ABN AMRO