The Potential Use Of Distributed Ledger Technology In Digital Payments In The European Union

Distributed ledger technology (DLT) is one of the major digital innovations in finance, implemented in practice for more than a decade and further developed since then. It represents a means of transforming payment, clearing and settlement processes. Since its creation, DLT has made significant progress, currently becoming a major testing ground for financial service providers, financial market infrastructure operators, central banks and other entities operating in the financial sector, but it has not yet reached maturity. DLT is also a topic of interest at the EU level, being the subject of the DLT Pilot Regime, as a component of the Digital Finance Package, introduced by the European Commission in 2020 to facilitate and support the potential of digital finance in terms of innovation and competition, while mitigating potential associated risks. The main objective of this paper is to bring to the forefront the actions involved in the implementation of the Pilot Regime in the EU. Recent initiatives involve a sandbox environment aimed at identifying all the practical aspects of implementing DLT in the EU financial system, considered relevant both by the main economic agents involved and by the regulatory authorities. Thus, it is highlighted that the future of a robust digital economy at EU and global level will thrive in an innovative environment in the field of implementing new technologies, within an appropriate regulatory Framework.