Finance22 September, 20262 min read
European Central Bank Launches Pontes Settlement Rail For Tokenized Securities In Central Bank Money
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Pontes enables settlement of tokenized assets in central bank money for banks. ECB will invest a small portion of its own funds in tokenized securities via Pontes.
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Pontes goes live
The European Central Bank launched Pontes on Monday as a Eurosystem settlement rail that connects distributed-ledger market platforms with the Eurosystem’s existing TARGET settlement services so tokenized transactions can settle in central-bank money. The ECB said Pontes is designed to let trades in tokenized securities complete in central-bank money rather than commercial-bank balances, and the system opened the same day for banks clearing tokenized assets in central-bank money. The ECB said Pontes will initially launch with a limited service set, with functionality and longer operating hours to follow, and it targeted full implementation for 2028.
The ECB named an initial onboarding group that completed onboarding, including Deutsche Bank, Santander, Société Générale and the European Investment Bank, alongside DLT operators Clearstream, Axiology, Cashlink and SWIAT. The ECB said Pontes is part of a broader effort to make central bank money fit for the digital age, and it positioned the rail as separate from the consumer-facing digital euro project.
ECB to invest
The ECB began preparations to buy tokenized assets from its €23.1B own-funds portfolio, with those purchases set to settle through Pontes. The ECB said it would invest a small portion of its own funds in tokenized securities, and it framed the move as a way to gain firsthand experience across trade execution, settlement, systems and portfolio management. The ECB said the purchases will come from a non-monetary-policy portfolio that generates income to help cover the central bank’s operating expenses, and it said own funds sit outside its monetary-policy portfolios.
The ECB said initial purchases will focus on euro-denominated tokenized securities issued by euro-area central governments, regional governments, agencies and European supranational institutions. The ECB did not disclose the size of the tokenized allocation or when purchases will begin, and it said its Executive Board would set both after preparatory work is complete.
From rails to pilots
The Eurosystem said Pontes is intended for wholesale transactions, and it described Pontes as a platform that allows large-value transactions in tokenized assets to be settled in central bank money. The ECB said Pontes connects private blockchain networks where securities sit with the central bank’s existing payment systems, and it described the cash leg as being settled through the Eurosystem’s TARGET infrastructure. The ECB said Pontes launches ahead of Europe’s consumer-facing digital euro, and it planned a 12-month retail pilot in the second half of 2027 involving 36 payment-service providers, merchants and central-bank staff.
The ECB said first issuance of the retail digital euro is targeted for 2029, subject to legislation, while it separately targeted full implementation of Pontes for 2028. The ECB also pointed to Appia as a broader initiative intended to produce a blueprint for an integrated European DLT financial ecosystem by 2028, and it said Pontes would operate alongside that longer-term program.