Moreover, the use of the trigger solution would reduce the risks of fragmentation of the liquidity needed on the ‘cash-side’ of the settlement systems. Other central banks have experimented with trigger solutions . More recently, at Banca d’Italia, we successfully experimented with a trigger solution centred on TIPS, the Eurosystem’s instant payments platform.
The model to which Banca d’Italia is committed provides a DLT-agnostic protocol to synchronize the asset-leg and the cash-leg, making an instantaneous DVP transaction possible on a 24/7 basis. This work was carried out in cooperation with Algorand, which provides one of the most advanced blockchain solutions for financial services currently available on the market.