The National Bank of Denmark published an analysis on distributed ledger technology (DLT) in financial markets and what it would take for systemically important interbank transactions executed on DLT platforms to continue to be settled in central bank money. It argues that central bank money in Danish kroner should remain the primary settlement asset between banks, and flags that limited compatibility between current DLT platforms and central bank systems could push market participants towards alternatives such as tokenised bank deposits or stablecoins. DLT is presented as a potential way to streamline parts of capital market infrastructure through tokenisation, smart contracts and greater automation, but the analysis highlights constraints and risks including fragmentation across platforms, scalability limits, higher intraday liquidity needs from faster settlement, operational and cyber risks, and governance and legal uncertainties around liability and settlement finality. Central banks are described as pursuing two broad solution paths: interoperability models that link private DLT platforms to existing central bank settlement systems so central bank money remains on central bank infrastructure, and more integrated models that place central bank money and assets on the same DLT platform, either operated by the central bank or by a private operator with controlled access to central bank money. Only a small number of solutions have so far been deployed for real transactions, and the analysis cites BIS estimates that up to nine central bank solutions could be in production by 2030. For Denmark, the analysis notes that Kronos2 activity migrated in spring 2025 to the pan-European TARGET Services platform, making the National Bank of Denmark part of the European Central Bank’s work on future financial infrastructure. Future expansion of Danish settlement infrastructure, including considerations around DLT-based systems, is framed as being developed in collaboration with the ECB and with a focus on enabling settlement in Danish kroner.
National Bank of Denmark 2025-06-17
National Bank of Denmark outlines how DLT-based transactions could be settled in central bank money
The National Bank of Denmark's analysis on distributed ledger technology (DLT) in financial markets stresses the importance of central bank money in Danish kroner as the primary settlement asset for interbank transactions. It notes challenges like limited compatibility between DLT platforms and central bank systems, potentially leading to alternatives like tokenised bank deposits or stablecoins. The analysis suggests two solutions: interoperability models linking DLT platforms to central bank systems and integrated models placing central bank money on DLT platforms, with few solutions currently deployed and up to nine central bank solutions expected by 2030.