The European Central Bank is pondering the creation of a pan-European service for issuance of securities - and the potential role of distributed ledger technology in bringing the vision to reality.
Speaking at a joint ECB and European Commission conference in Frankfurt, central bank board member Yves Mersch, praised the role of the T2S mechanism in creating a harmonised settlement system for securities in Europe.
With German markets coming onboard today and the multi-year T2S project finally nearing completion, the ECB is turning its attention to the issuance of securities as the next step in achieving a capital markets union.
A fully harmonised system of securities issuance could reduce the transaction costs for capital financing, Mersch believes, making the European securities market more attractive in the global economy.
However legal and national rules have contributed to a geographical fragmentation of services into domestic blocs, limiting competition among issuers,
The goal of having euro area markets where access to capital financing is as easy and efficient as it is to the respective national market has - with few exceptions - not been met yet, says Mersch.
"This fragmentation is an area that calls for action," he says. "It may be worth exploring the establishment of a truly European issuance service - at least for some supranational debt instruments. We could even think about the ECB/Eurosystem playing an active role in setting up such an issuance service. And we could consider whether and to what extent new technologies, like distributed ledger technology (DLT), can be used in that process."