Research project explores suitability of blockchain technology for issuing and settling bonds in real time using a wholesale CBDC

The Oesterreichische Nationalbank (OeNB) joined forces with the OeKB CSD GmbH, the Österreichische Bundesfinanzierungsagentur (OeBFA), Raiffeisen Bank International AG and Erste Group Bank AG to launch a joint research project dubbed DELPHI (Delivery vs. Payment Hybrid Initiative). In this project, the involved parties aim to simulate both the issuance and settlement of Austrian government bonds as security tokens on a blockchain platform.

For the bond issuance, the OeNB will provide a wholesale central bank digital currency (CBDC), which will be pegged directly to the euro, to ensure that the title to the securities and the corresponding payments are exchanged simultaneously.

Besides exploring digital bond issuance and related processes, DELPHI is also going to address the legal requirements for such a solution – with a view to assessing compatibility with applicable EU and national law. As part of this project milestone, DELPHI will highlight where the current legal framework may need to be changed to facilitate the implementation of a blockchain-based solution.

Moreover, a DELPHI substream will evaluate the potential for tailoring the project’s solution to market needs. The research project is set to be a major contribution to further developing the Austrian capital market’s adoption of blockchain technology.

It should be stressed that the wholesale CBDC applied in the DELPHI initiative will be used solely for research purposes and should therefore not be taken as an indication that the OeNB intends to issue a wholesale CBDC in the future. This notwithstanding, Reinhard Beck, head of the OeNB’s Treasury – Back Office division is convinced that “new technologies will, without any doubt, have a lasting impact on the financial system.”