Blockchain-based Settlement of Tokenized Securities with Trigger Solution
Sector: Tertiary sector · Industry: Banking and financial services · Organisation: Börse Stuttgart, Deutsche Bank, Commerzbank, DZ Bank, LBBW, Bankhaus Metzler, Vontobel · Maturity level: Pilot
The German Central Bank (Bundesbank) has developed and tested a blockchain-based solution for settling tokenized securities in cooperation with BX Digital. The Trigger Solution connects blockchain transactions with the TARGET2 system and enables atomic delivery-versus-payment processes. In trials, five digital securities (bonds, funds, stocks) were successfully settled in two different scenarios.
Documentation status
- Project status: Pilot
- Evidence: Evidence medium
- Editorial review: Ufuk Avci, 15 April 2026
Description
The Bundesbank Trigger Solution is a technical bridge between DLT platforms (blockchains) and the Eurosystem's traditional TARGET2 payment system. It enables delivery-versus-payment: the transfer of securities on the blockchain and the payment in the conventional system occur simultaneously, without the need to create digital central bank money. The first version was developed and tested in 2021 with Deutsche Börse and the Finance Agency. As part of the ECB Exploratory Work (May–November 2024), 25 institutions participated — 20 as Market Participants, 11 as Market DLT Operators.
Since 2016 (Project Blockbaster with Deutsche Börse), Deutsche Bundesbank has researched blockchain-based securities settlement. In 2021, the first successful test of the Trigger Solution was conducted together with Deutsche Börse and the Federal Finance Agency: a DLT platform was connected to TARGET2 so that a securities transaction automatically triggered the corresponding payment. From May to November 2024, the Eurosystem conducted Exploratory Work in which 25 institutions participated with the Bundesbank Trigger Solution. In total, 23 trials were conducted — 15 trials (real central bank money, production systems) and 8 experiments (test environments). On 18 and 25 September 2024, the Baden-Württemberg Securities Exchange (Börse Stuttgart / BX Digital) tested secondary market transactions with Commerzbank, Deutsche Bank, DZ BANK, LBBW, Bankhaus Metzler and V-Bank — five digital securities (bonds, funds, shares). The trial phase ended as planned on 29 November 2024. The traditionally several-day issuance process was significantly shortened by the Trigger Solution.
Perspectives
B2B — organisations perspective
Banks and market infrastructures can connect their DLT platforms to TARGET2 via the Trigger Solution without segregating new liquidity. The solution is DLT-agnostic and can be used with various blockchain platforms.
B2C — consumers perspective
End customers could benefit in the long term from lower transaction costs and faster settlement times in securities trading. Tokenisation also enables trading in fractions of securities and improves liquidity.
Employees perspective
Treasury and settlement teams benefit from automated settlement processes — issuance and redemption of digital securities can be completed in minutes instead of days without manual intervention.
Benefits
General
- The atomic settlement of securities transactions completely eliminates counterparty risks.
- Automated smart contracts significantly reduce manual errors and processing times.
- Integration with TARGET2 ensures compliance with European regulatory standards.
B2B — organisations
- Banks can significantly reduce their settlement costs by eliminating intermediaries and automating processes.
B2C — consumers
- Private investors benefit from faster securities transactions and potentially lower fees.
Employees
- Employees are relieved from repetitive manual tasks and can focus on strategic activities.
Challenges
General
- Integrating legacy systems with blockchain technology requires extensive technical adjustments.
- Regulatory uncertainties and evolving compliance requirements pose ongoing challenges.
B2B — organisations
- Companies must make significant investments in new technologies and employee training.
Employees
- Employees require extensive further training in blockchain technology and digital asset management processes.
Technology foundation
The solution is based on blockchain technology connected to the existing TARGET2 payment system of the European Central Bank. This hybrid architecture allows the advantages of blockchain technology to be utilised while ensuring connection to proven financial infrastructures.
Implementation examples
Bundesbank Trigger Solution Trial with BX Digital
The initiative aims to overcome the traditional T+2 settlement cycles and eliminate counterparty risks through atomic delivery-versus-payment transactions. At the same time, it seeks to increase the efficiency of the German financial market infrastructure through digitalisation.
The Bundesbank successfully tested the blockchain-based settlement of five digital securities using the Trigger solution in cooperation with BX Digital.
In a comprehensive trial programme, the Deutsche Bundesbank, together with BX Digital from the Börse Stuttgart Group, tested an innovative blockchain solution for securities settlement. The tests covered five different digital securities including bonds, funds, and shares in two different settlement scenarios. Market participants with access to the TARGET2 system were actively involved in the tests and were able to validate the practical applicability of the solution.
The solution addresses the long-standing problems of securities settlement such as lengthy settlement times, high costs due to intermediaries, and counterparty risks. By integrating blockchain, manual processes are automated and transparency is increased.
Tags
Tokenisation, DLT, Securities settlement, TARGET2, Delivery-versus-Payment