In a joint statement on Tuesday 25 June 2024, the Luxembourg Central Bank (BCL) and the central bank of France (Banque de France) celebrated the successful conclusion of Project Venus. This pioneering initiative in digital bond issuance and settlement leveraged distributed ledger technologies (DLTs) and wholesale central bank digital currency (wCBDC). Led by the European Investment Bank and supported by Goldman Sachs, Société Générale and Santander, the collaborative effort aimed to demonstrate the feasibility and benefits of using wCBDC for digital asset settlements in the primary market.
Project overview
Under the umbrella of Project Venus, the EIB issued a €100m digital bond, underwritten by Goldman Sachs, Société Générale and Santander. The primary market transactions were facilitated through a two-step process: initially, a delivery versus payment (DvP) settlement took place between the EIB and Goldman Sachs, with Goldman Sachs later serving as the lead bank. This phase ensured that CBDC was exchanged for the digital bonds seamlessly. Next, following the primary settlement, further transactions took place between Goldman Sachs and secondary market investors from Société Générale and Santander, utilising the same digital settlement mechanisms.
Two distinct DLTs
The success of Project Venus relied on the integration of two distinct DLTs: the Securities DLT and Cash DLT (DL3S). Operated by Goldman Sachs, the Securities DLT platform facilitated the issuance and registration of the EIB digital bonds, while DL3S, developed jointly by Banque de France and BCL, provided the infrastructure for settling transactions in wCBDC.
Secured and efficient settlements
The interoperability between these two DLTs was achieved through a sophisticated hashed timelock contract (HTLC) mechanism. This mechanism enabled atomic settlements, ensuring that transactions on both the securities and cash DLTs were completed simultaneously and instantaneously, thus qualifying as same-day (T0) settlements. This efficiency contrasts sharply with traditional settlement cycles, which can take up to T+5 days.
Risk reduction through tokenisation
By tokenising euro central bank money (CeBM), Project Venus effectively reduced credit, counterparty and market risks inherent in other forms of digital settlement assets, such as stablecoins, stated the press release.
Legal compliance
The banks also noted that the issuance of digital bonds under Project Venus adhered to the Luxembourg Dematerialised Securities Act 2013 and complied with Mifid II regulations, ensuring legal clarity and investor protection.
Looking ahead, the success of Project Venus sets a precedent for future developments in digital capital markets across Europe, advocated BCL. Continued cooperation and exploratory work within the eurosystem will focus on refining wCBDC solutions and addressing operational challenges for broader adoption, with conclusions from experiments and trials expected by mid-2025. The ultimate goal is to establish wCBDC as a trusted and resilient settlement asset in the evolving digital financial ecosystem, according to the press statement.
