The rise of a market for digital assets, both natively digital (e.g., non-fungible tokens, utility tokens) and those representing non-digital resources (e.g., security tokens, stablecoins, e-money tokens), is closely linked with the growing diffusion of distributed ledger technologies (DLT) platforms amonginvestors. The increasing volume of transactions involving digital assets makes it worthwhile toinvestigate how central bank money can contribute to make the settlement safer and more efficient.While this is not strictly needed at the current juncture, central banks should arguably prepare toensure that they can keep central bank money at the core of the settlement process of financiallyrelevant assets. This requires the identification of possible solutions to increase interoperabilitybetween currently independent infrastructures: those regulating the exchange of the digital assetsand those providing central bank money settlement services. A way to achieve this goal is to allowthese transactions to flow through the market infrastructures, where central bank money is safelymanaged. This implies building a “bridge” between DLT platforms and market infrastructures. This paper analyses several technical interoperability models and then describes the results of twoexperimental activities, which evaluate two different solutions for synchronizing the asset-leg andthe cash-leg of a DvP (delivery versus payment) transaction. Both use the Target Instant PaymentSettlement (TIPS) platform to provide the settlement services of the cash leg. The first, named “TIPS Hash-Link”, is a lightweight, API based and DLT agnostic protocol which enables a loosely coupled integration of the market infrastructure with the majority of DLT platforms. Inspired by the Hash‑Time Locked Contracts (HTLC) protocol, TIPS Hash-Link has been specifically tailored to overcome some failure scenarios commonly experienced with HTLC, leveraging TIPS as a trusted escrow for funds and a smart contract to coordinate the DvP operations on the DLT in a safe and consistent manner. The second one, named “TIPS-Algorand Just In Time Locking”, takes advantage of the features offered by a specific DLT platform, Algorand. In particular, it leverages a native feature of the chosen DLT that simplifies DvP transactions guaranteeing atomicity; as such, this approach needs the two systems to be directly connected to interact with each other
