Most of the words in this debate are used interchangeably, and almost none of them mean the same thing. Here is what each one is, what it is not, and the point at which the difference stops being semantic and starts costing money.
Execution gets the attention. Settlement is where the money moves, and it is described in language that has grown steadily less precise as more people have joined the conversation.
Tokenised deposits get called digital money. Stablecoins get called settlement assets. Atomic gets used as though it were a synonym for final. Each of those substitutions hides a difference that matters to whoever is carrying the risk.
What follows is not advocacy. It is the set of definitions we work from, offered so that the arguments we make elsewhere can be checked against them.
Execution is the agreement of a trade: price, size, counterparty.
Clearing is everything that happens between agreement and money moving: confirmation, obligation calculation, margining, and in a cleared market the substitution of a central counterparty for the original two.
Settlement is the discharge of the obligation. Asset delivered, payment made, nobody owes anybody anything for that trade.
They are often spoken of as one process because on a screen they feel like one moment. They are separated by hours or days, and every risk worth naming lives in that gap.
Settlement in central bank money discharges the obligation without leaving anyone holding a claim on a commercial intermediary.
That is the whole of its advantage, and it is a narrow one: it removes settlement credit risk. It does not remove operational risk, legal risk, or the risk that the instruction was wrong when it was sent.
International standards direct financial market infrastructures to settle in central bank money where it is practical and available, which is a deliberately conditional phrase. For most participants in most currencies it is not directly available, and access is a matter of central bank policy rather than a product anyone can sell you.
A deposit is a promise from a specific institution to pay you. When settlement happens across the books of a commercial bank, the party receiving the money is holding that bank's credit until the position is unwound.
This is not a criticism. The overwhelming majority of settlement in the world happens this way, it has been stress tested through several crises, and the risk is usually small and usually well understood.
It is simply not the same instrument as a central bank claim, and the difference is only invisible when nothing goes wrong.
The record moves to a programmable ledger. The claim does not move anywhere.
Tokenising a deposit changes where the record lives. It does not change whose promise you are holding.
What tokenisation can genuinely change is conditionality: a deposit on a programmable ledger can be made to move only when something else moves. That is a real gain, and it is a gain in plumbing rather than in credit quality.
It is not a bank deposit and it is not central bank money. Whoever holds it is exposed to the issuer, to the assets held against it, and to the terms on which it can be redeemed.
Some are conservatively backed and closely supervised. That is a statement about a particular issuer, not about the instrument category, and the distinction collapses the moment the two are discussed as one thing.
Netting offsets obligations so that only the difference is paid. It is enormously efficient with liquidity, which is precisely why it is used.
Gross settlement discharges each obligation individually and finally, which removes the exposure window that netting creates but demands materially more liquidity through the day.
This is the trade we are most often asked about, so we will state it plainly rather than let it sit in a footnote: netting through a correspondent you trust can economise liquidity in ways that a gross rail cannot. Anyone claiming otherwise is selling something.
DvP means the asset moves only if the payment moves. Payment versus payment is the same condition applied to two currencies.
It removes principal risk: the risk of delivering one leg and not receiving the other. It has been achieved for decades without any distributed ledger, through central securities depositories and payment systems that hold both legs and release them together.
The technology is not what makes it work. The conditionality is.
Finality is the point at which a transfer becomes irrevocable and unconditional, and cannot be unwound, including by an insolvency practitioner acting for a failed participant.
It is conferred by law and by the designated rules of a system. It is not conferred by a database being difficult to alter.
Atomic means both legs occur or neither does, as one indivisible operation. It is a guarantee about how the software behaves.
Atomic is a property of the software. Final is a property of the law. A system can be one without the other.
This is the confusion we see most often, and it is the one with the sharpest edge. A design can be perfectly atomic and still leave a participant arguing in court about whether a transfer stands. Conversely, systems that are not atomic in any technical sense have carried legally final settlement for decades.
An account held with another bank, in that bank's jurisdiction, so that payments can be made and received in a currency where you have no direct central bank access.
It is why correspondent chains exist, why a payment can pass through three institutions to reach one, and why the balance in that account is money sitting still rather than working.
Every one of those hops is a place where a reconciliation break can begin.
These distinctions look academic until a decision rests on one.
A firm that treats a tokenised deposit as equivalent to central bank money has changed its ledger and not its credit exposure. A firm that treats atomicity as finality has bought a software guarantee and assumed a legal one. A firm that describes any of the above as removing risk, rather than moving it somewhere more visible, has stopped describing and started marketing.
We hold ourselves to the same test. IDBX is building for settlement in central bank money because we think the risk case is strong, and the hard part of that is not the software. It is access, permissions and the formation of a group of institutions willing to move together. None of that is solved by using the right vocabulary.
But the argument cannot even be had while the words mean whatever the last speaker needed them to mean.