First tokenised koruna bonds settle almost instantly in tests
The Czech National Bank (CNB) has issued its first tokenised koruna bonds and tested near-instant settlement on distributed ledger technology. The pilot covered transfers, purchases, sales and repo transactions for potential central bank use.
Small trades test the chain
The CNB issued tokenised bonds on infrastructure operated by the Central Securities Depository, which also registers and settles trades in the securities.
A domestic commercial bank acted as counterparty for transfers, purchases and sales against payment and repo transactions.
Tests in October and November involved tens of thousands of koruna and settled almost instantaneously.
Within its CNB Lab innovation hub, the bank tested contracts, rules, processes, execution, settlement, technology and portfolio management.
The CNB said it verified its ability to use the infrastructure for monetary policy operations and international reserve management.
It described itself as ready for broader use of tokenised securities.
Central bank money at the core
Governor Aleš Michl wants a large market in koruna assets that are easier to trade than German Bunds, with central bank money rather than private stablecoins underpinning settlement.
For its international reserves, the CNB also invested in a euro-denominated government bond existing exclusively on DLT.
A year earlier, CNB Lab launched a test portfolio containing bitcoin, a stablecoin and tokenised deposits.
That work examines legal, accounting, operational, security and technological aspects of digital assets.
Access remains restricted
The pilot tested infrastructure with access limited to approved financial institutions.
Shared, validated records and automated rules connect issuance, trading, settlement and servicing, with transaction records visible only to the parties involved.
DLT supports settlement 24/7 and can reduce administration.
Source: CNB issues its first DLT bond
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