The Czech National Bank issued its first bonds using distributed ledger technology, each with a face value of 10,000 koruna, it said in remarks announcing the transactions on Nov. 10.
The Bank for International Settlements published the remarks on Nov. 12. The title was “The Czech National Bank’s first DLT bond and the new physics of the digital koruna.” The central bank also tested lending against the bonds as collateral.
The transactions used a platform operated by the Prague Stock Exchange’s Central Securities Depository, the central bank said. It described the issuance as a small initial step toward making assets priced in koruna easier to trade.
The exercise formed part of CNB Lab, the central bank’s testing programme. A year earlier, the programme created a digital portfolio containing bitcoin, a dollar stablecoin and a tokenised deposit, the central bank said.
The central bank described distributed ledger technology, or DLT, as a shared transaction record that could reduce the work of checking separate records against one another. Participants currently maintain their own records and then reconcile them.
The central bank said the tested system puts rules directly into the bond and carries them out automatically. Transactions can settle around the clock, allowing the transfer of assets without waiting for opening hours.
The central bank said this version of the technology uses no miners, the participants that validate transactions in bitcoin’s network. Only the parties to a transaction can see its record.
The central bank said it must participate from the start so transactions settle using central bank money rather than private money such as stablecoins. It described DLT as a possible future platform.
The central bank said its goal is a large market for koruna assets that are easier to buy and sell than German government bonds. It linked that ambition to both available securities and payment speed.
The central bank said instant payments already allow money to move immediately between accounts. Transfers previously could take up to two days, presenting payment speed as another factor in a small currency’s prospects.
The remarks also set out a possible future in which artificial intelligence agents collect salaries, negotiate mortgages and move savings between banks overnight. Machines could account for 95% of the koruna market, the central bank said.
The central bank presented that share as a possibility, giving no timetable. It was preparing for automated finance while seeking low inflation and a strong koruna.
The central bank said a currency’s future depends on both the assets available in it and the systems used to pay. It also assigned cash a continuing role as an offline backup.
