Euroclear, in collaboration with Digital Asset and The World Gold Council, has successfully completed a groundbreaking pilot to tokenise gold, Gilts and Eurobonds for collateral management. This initiative showcased how Distributed Ledger Technology (DLT) can revolutionise collateral mobility, enhance liquidity and boost transactional efficiency.
"We recognise the immense value in industry experimentation to showcase the advantages of DLT for the market. As we strive to deliver even better and faster collateral mobilisation for our clients, digital technologies like DLT will be key enablers for us to achieve this."
Olivier Grimonpont,
Managing Director, Head of Product Management, Market Liquidity - Euroclear
The demand for gold as a traded asset continues to rise, with the average daily trading volume in 2023 reaching USD 162 billion globally.
At the same time, sovereign Gilts and Eurobonds offer a deep pool of high-quality liquid assets. As of mid-2023, the UK Gilt market was valued at nearly GBP 2.4 trillion, while outstanding Eurobond issuance exceeded EUR 12.97 trillion.
Diverse participation: The pilot included 27 participants, such as investors, banks, CCPs, custodians, and a central securities depository.
Innovative technology: Five types of cross-application transactions were connected using 11 distributed applications, including six registry apps and five margin apps. Utilising 14 Canton nodes, the pilot programme executed 500 transactions and used the digital twins of real-world assets as collateral in real-time transactions.
Proven Impact: The collaboration demonstrated the ability to create a digital twin of these previously immobile real-world assets and use those tokenised assets as collateral in atomic, real-time transactions. The pilot also validated the secured party’s control over tokenised assets, highlighting their potential to meet intraday margin calls and improve the financial ecosystem’s efficiency.
This collaboration marks a significant step in reshaping traditional financial services and underscores Euroclear’s unwavering commitment to innovation and collaboration within the fintech ecosystem.
