ECB brings Central Bank money to tokenised market

The European Central Bank has taken a significant step towards integrating distributed ledger technology with Europe’s core financial infrastructure, launching Pontes to allow wholesale tokenised asset transactions to settle in central bank money.

ECB brings Central Bank money to tokenised market

Pontes is designed as a bridge between distributed ledger networks and the Eurosystem’s TARGET settlement services, giving banks and market infrastructures access to a risk-free settlement asset without requiring them to abandon emerging tokenised market structures.

The move matters because one of the biggest barriers to scaling tokenised finance has been settlement. Digital securities can be issued, traded and transferred on distributed ledgers, but if the cash leg still depends on separate legacy processes, many of the efficiency gains disappear.

From Experiment to Market Infrastructure

Pontes builds on the Eurosystem’s extensive DLT trials in 2024, when 64 participants completed more than 40 trials and experiments involving over €1.59bn of transactions. The work tested how DLT platforms could interact with central bank money settlement and included delivery-versus-payment and payment-versus-payment use cases.

The new service initially offers a limited set of functions, with enhanced capabilities and longer operating hours expected to be introduced progressively. Full implementation is targeted for 2028.

An initial group including Deutsche Bank, Santander, Société Générale, the European Investment Bank and several German public-sector banks has already completed onboarding, alongside DLT infrastructure operators including Clearstream and SWIAT.

The ECB Becomes a Tokenised Securities Investor

The ECB is also preparing to put its own balance sheet to work.

It has launched preparations to invest a small portion of its own funds in tokenised securities, initially focusing on euro-denominated public-sector and supranational instruments. Those transactions will be settled through Pontes, giving the central bank first-hand operational experience of tokenised markets.

That is notable because the ECB is no longer simply observing tokenisation or providing settlement infrastructure; it is preparing to participate directly as an investor.

Appia Looks Beyond Settlement

Pontes is only one half of the Eurosystem’s strategy. Its companion initiative, Appia, is examining how a broader European tokenised financial ecosystem should develop, covering common standards, interoperability, collateral, issuance, cross-border connectivity and the respective roles of public and private money. A blueprint is expected by 2028.

The broader ambition is clear, Europe does not want tokenised finance to evolve entirely on private rails or around privately issued settlement assets. Pontes is therefore less about putting existing payments on blockchain than ensuring that, as financial markets become tokenised, central bank money remains at the centre of settlement.