Czech central bank completes DLT bond test, backs central bank money over stablecoins
The Czech National Bank has completed small-scale tests of tokenised bond and repo transactions settled on distributed-ledger technology, with Governor Aleš Michl saying central bank money should anchor settlement of tokenised securities. The preference could limit the institutional payment balances available to stablecoin issuers if eligible institutions can pay through central-bank-money infrastructure.
The pilot, run in October and November, involved transfers, purchases and sales against payment, and repo transactions, the CNB said. Settlement was almost instantaneous, but transaction volume was only in the tens of thousands of koruna. In a Nov. 10 speech, Michl named commercial bank Česká spořitelna as the counterparty, put each bond's nominal value at CZK 10,000 and said interest payments had also been tested. The bonds ran on Prague's Central Securities Depository infrastructure using DLT, with access restricted to approved financial institutions and transaction records visible only to the counterparties.
Michl's goal is a much larger market for koruna-denominated assets that are easier to buy and sell than German Bunds, an ambition beyond what the small test establishes. His settlement preference sits alongside a broader willingness to experiment: a year earlier, CNB Lab had started testing Bitcoin, a dollar stablecoin and a tokenised deposit. Yet a Nov. 5 presentation by CNB payments-regulation director Michal Vodrážka said settlement in CNB money on DLT was not yet available, five days before the bond-test announcement, which did not specify whether the cash arrangement had changed. The same presentation said the CNB Board had made no decision to issue a Czech retail central bank digital currency.
The competitive implication for stablecoins remains forward-looking because the CNB has not identified the pilot's exact cash instrument. Putting a bond on a shared ledger does not determine which institution supplies the money used to buy it. The Eurosystem launched Pontes on Sept. 21 to enable wholesale tokenised asset transactions to settle in central bank money, connecting market DLT platforms with TARGET Services; the ECB has described plans for significantly longer operating hours by mid-2027 and 24/7/365 availability in 2028. Where an eligible buyer can use connected central bank settlement infrastructure, a tokenised securities purchase need not require a private settlement token.
The next meaningful test of Michl's vision is how central bank money becomes available for those trades, to which institutions and during which hours. If a larger tokenised koruna market develops around public settlement money, more securities activity could arrive without a corresponding need for private settlement tokens.
What it means for Pakistan: Pakistan's own exploration of tokenised assets and central bank digital currency is still at an early stage, with the State Bank of Pakistan having signalled interest but not launched a pilot. The Czech test shows a central bank preferring public settlement money over stablecoins for institutional trades, a preference that could inform how Pakistan's regulators approach tokenised government securities and wholesale payments if such work advances. No Pakistani institution has announced a similar pilot.
