ECB rolls out Pontes to settle tokenised wholesale trades in central bank money

The European Central Bank and the euro area's national central banks on Monday launched Pontes, a distributed ledger technology (DLT) solution designed to settle wholesale transactions in tokenised assets using central bank money. The rollout is the first milestone in the Eurosystem's effort to make central bank money compatible with a tokenised market structure, with full implementation targeted for 2028. Pontes links market DLT platforms to the Eurosystem's TARGET Services, enabling tokenised trades to settle in what the ECB describes as the safest form of money. It operates under a dual settlement approach: participants can settle on the Eurosystem DLT platform using cash tokens or settle in T2, the real-time gross settlement (RTGS) system. Finality is achieved once the cash leg is completed in T2. A HashLink protocol enables delivery-versus-payment as well as other all-or-none transaction types. The design builds on the Eurosystem's 2024 exploratory phase, which included more than 50 trials involving 64 participants from the public and private sectors. An initial group of users is ready to access Pontes immediately. The first wave 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. DLT operators Axiology, Cashlink, Clearstream and SWIAT are also onboarded, alongside the Deutsche Bundesbank. "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." ECB President Christine Lagarde said the Eurosystem is working to enable "a more integrated, innovative and resilient European financial market in the digital age." Separately, the ECB said it has started preparatory work to invest a small portion of its own funds in tokenised securities, settling in central bank money via Pontes. The initial focus will be euro-denominated securities issued by euro area governments, regional governments, agencies and European supranational institutions. The ECB Executive Board will determine operational details and timing once the preparatory work is completed. The ECB said the move is intended to build first-hand experience across trade execution, settlement and portfolio management. Pontes follows the ECB's earlier push for central bank money to move on-chain and sits alongside other wholesale settlement efforts, including Fnality's central bank money network. The Eurosystem said Pontes will be expanded gradually, with upgraded functionality and longer operating hours rolled out in stages. Work also continues on the Appia initiative, aimed at delivering a blueprint for a tokenised financial ecosystem in Europe by 2028.