The European Central Bank and the euro area’s national central banks on Monday launched Pontes, a distributed ledger technology solution that lets wholesale transactions in tokenised assets settle in central bank money. The launch marks the first step in the Eurosystem’s programme to make central bank money fit for a tokenised future, with full implementation expected by 2028.
How Pontes Works
Pontes connects market DLT platforms to the Eurosystem’s TARGET Services so tokenised trades can settle in the safest form of money. It uses a dual settlement model: participants can settle on the Eurosystem DLT platform with cash tokens, or in T2, the real-time gross settlement system. Final settlement is reached once the cash leg completes in T2, and a Hash-Link protocol supports delivery-versus-payment and other all-or-none transactions. The design builds on the Eurosystem’s 2024 exploratory work, which ran more than 50 trials with 64 public and private-sector participants.
Banks and DLT Operators Onboarded
An initial group is ready to use Pontes immediately. It includes 13 market participants — ABANCA, BayernLB, Caisse des Dépôts et Consignations, Cecabank, Deutsche Bank, Deka Bank, DZ Bank, the European Investment Bank, KfW, Memo Bank, NRW.BANK, Santander and Société Générale — plus DLT operators Axiology, Cashlink, Clearstream and SWIAT, with the Deutsche Bundesbank also onboarded. “Pontes brings the stability and trust of central bank money to the European tokenised finance ecosystem,” said ECB Executive Board member Piero Cipollone. “It will give an important advantage to help it scale.” President Christine Lagarde said the Eurosystem is working to enable “a more integrated, innovative and resilient European financial market in the digital age.”
ECB Will Invest Its Own Funds in Tokenised Securities
In a related announcement, the ECB said it has started preparatory work to invest a small portion of its own funds in tokenised securities, settled in central bank money through Pontes. The initial focus will be euro-denominated securities issued by euro area governments, regional governments, agencies and European supranational institutions. The Executive Board will set the operational details and timing once that work is complete, a step the ECB said will build first-hand experience across trade execution, settlement and portfolio management.
A Broader Push to Tokenised Finance
The launch follows the ECB’s earlier call for central-bank money to move onchain and joins wholesale settlement projects such as Fnality’s central-bank money network. Pontes will expand gradually, with enhanced features and longer operating hours introduced in stages, while the Eurosystem continues work on the Appia initiative to deliver a blueprint for a tokenised financial ecosystem in Europe by 2028.
