KPMG and KfW have released a detailed analysis on the maturity of the DLT-based capital market in Germany and Europe. The report highlights both current framework conditions and challenges that need addressing for successful implementation of DLT-based transactions. Using experiences from blockchain-based digital KfW bonds issued in summer 2024, the study seeks to demonstrate the necessity and practicality of these transactions.
Tim Armbruster, Treasurer at KfW, emphasized the importance of embracing new technologies to improve capital market refinancing efficiency: "As one of the most active issuers in the world, it is important to us to tap into new technologies to increase the efficiency of our capital market refinancing. This is a continuous learning process that requires a lot of resources, but which our staff are finding very exciting."
Jens Siebert from KPMG underscored the significance of advancing a DLT-based capital market: “Our aim is to leverage our unique market position in order to bring together a large number of market players and in turn help to ensure that the German and European capital markets remain competitive in the future.” He added, "In light of the technological paradigm shift, it is crucial that Germany and the EU actively drive the development of a DLT-based capital market in order to strengthen their competitiveness and sovereignty in a digital world."
The publication includes contextual explanations supplemented by a glossary for easier understanding. It evaluates input from various stakeholders like Bankhaus Metzler, Boerse Stuttgart Digital, Deutsche Bank among others. These insights highlight roles within this digital environment and provide recommendations for enhancing scalability.
The report outlines findings such as how existing legislation like The Electronic Securities Act (eWpG) 2021 provides a strong foundation needing further development. It suggests combining public and private blockchains for efficient transaction processing. Furthermore, it identifies key areas requiring adjustments like building secondary market liquidity through more participants with expertise.
Central bank money's role is emphasized as crucial for secure processing. The European Central Bank's recent announcement regarding its commitment towards central bank money settlement for these transactions was positively received.
The full analysis will soon be available on respective websites.