Finance · updated 2h ago · 2 min read
European Central Bank Launches Pontes To Settle Tokenized Assets In Central Bank Money
Pontes enables settlement of wholesale tokenized assets in central bank money. ECB will invest part of its own funds in tokenized securities via Pontes.
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Pontes goes live
The European Central Bank launched Pontes on Monday, a platform that enables banks and other eligible financial institutions to settle tokenized-asset transactions in central-bank money.
Christine Lagarde said at a Eurogroup summit on Friday, "Now, Pontes is, to summarize it quickly for you, it’s a digital euro made available for banks so that they can transact amongst themselves using tokenized assets and distributed ledger technology."
Pontes links market distributed-ledger technology platforms to the Eurosystem’s TARGET Services, enabling participating banks to settle tokenized wholesale transactions in central-bank money.
The ECB said Pontes will initially operate between 8 a.m. and 4 p.m. CET on business days, with the ECB planning to extend its operating hours and functions over time.
The ECB also said it would begin investing a tiny part of its €23 billion own funds portfolio in blockchain-based securities, focusing on highly rated euro-denominated debt issued by public institutions.
Stablecoins bypassed
The ECB designed Pontes to settle wholesale tokenized asset transactions using central bank money without going through privately issued stablecoins. The ECB explained that the system enables financial institutions to process transactions on distributed ledger technology (DLT) networks without relying on privately issued settlement assets such as Tether (USDT) or USD Coin (USDC). Piero Cipollone said, "Pontes brings the stability and trust of central bank money to the European tokenized finance ecosystem," and he added that it "will provide a key advantage as the ecosystem scales."
The ECB said the system was built on findings from the Eurosystem's 2024 experiments on settling DLT-based transactions with central bank money. The ECB also positioned Pontes as part of a broader effort to keep central-bank money at the core of Europe’s increasingly tokenized financial markets.
Roadmap and investment
The ECB said Pontes would be developed in stages, alongside its longer-term Appia initiative for wholesale tokenization, with full implementation expected by 2028. The ECB said Pontes is the first part of the Eurosystem’s strategy to bring central bank money into tokenized finance, and it plans to add services and longer operating hours over time. The ECB said its executive board will decide the size, timing and operational details of the investments once preparatory work is complete.
The ECB said the initial investments would focus on euro-denominated securities issued by euro-area governments, regional authorities, agencies and European supranational institutions. The ECB said it would test the technology as an investor, from buying tokenized bonds to settlement and portfolio management, while Pontes is expected to be fully implemented by 2028.