DNB has joined CBMT, a test environment where European banks trial tokenised bank deposits across borders under existing banking regulation. The Norwegian krone becomes the fourth currency, alongside the euro, dollar and yen.
Caption: Ole Morten Sunde (left) and Nikolai Nyrud Gobel (right) work on tokenisation and digital assets at DNB. Photo: DNB
Tokenised bank deposits are ordinary bank deposits recorded and moved on a distributed ledger, a shared database of the kind blockchains are built on. The money remains a deposit with the bank, but can in principle be transferred and settled around the clock and directly between parties. CBMT, or Commercial Bank Money Token, is a network in which banks test how such deposits can be used across borders within the rules banks are already subject to.
DNB will use the sandbox to see how tokenised deposits in Norwegian kroner can move between parties, be exchanged against other currencies and settle securities.
"Joining CBMT lets us explore tokenised deposits together with other banks. What we want to understand is whether our customers could move money safely and efficiently on a distributed ledger, while it keeps its role as a deposit."
Ole Morten Sunde, SVP and Head of Emerging Business Products at DNB, in a LinkedIn post
DNB brings the Norwegian krone into the network, alongside the euro, the US dollar and the Japanese yen. CBMT is led by Die Deutsche Kreditwirtschaft, the joint body of the German banking associations, and participants include Commerzbank, DZ Bank, Helaba, UniCredit, ABN Amro and BNP Paribas. According to CBMT, the network keeps expanding with new banks and new currencies.
In another LinkedIn post a week ago, Sunde writes that DNB began working on tokenisation with Norges Bank in 2021. For a long time only the central bank and DNB were exploring the technology. More banks, asset managers and the market infrastructure are now involved, working on commercial use cases.
"Tokenisation is more of a coordination problem than a technology problem. The Norwegian finance industry has built shared infrastructure together before instead of everyone doing their own thing. We think tokenisation needs the same."
Ole Morten Sunde on LinkedIn
In May, Kaupr reported that DNB had opted out of the bank consortium Qivalis, which is behind a euro stablecoin. Sunde said at the time that taking an ownership stake in issuing a stablecoin was not right for DNB now, and that the bank is focusing on tokenised deposits in close cooperation with Norges Bank.
On 7 September, Norges Bank named DNB and DNB Carnegie among twelve financial industry players in its work exploring tokenisation.
In December 2023, Kaupr had a long conversation with Sunde and Nikolai Nyrud Gobel. Gobel joined DNB from Kaupang Krypto, now part of K33, and is today a product manager at the bank. DNB was at an exploratory stage, and Gobel pointed to custody, trading and tokenised money, either stablecoins or tokenised bank deposits, as the most common pilots among banks.
Gobel also said that much of the efficiency from tokenisation only arrives when more players agree on the same standard, and Sunde made the same argument:
"It is not always the technology that is most demanding, but building a shared value chain and a network. That is often the biggest challenge."
Ole Morten Sunde to Kaupr in 2023
Sources: CBMT, DNB, Norges Bank, Kaupr
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