The European Central Bank has launched a new blockchain settlement system that allows banks and other eligible financial institutions to settle transactions involving tokenized assets directly in central-bank money, marking a major step in Europe’s effort to integrate blockchain with traditional financial infrastructure.
Called Pontes, the system connects distributed-ledger technology platforms used by financial-market participants with the Eurosystem’s existing TARGET Services. The ECB launched the service on Sept. 21 and said it represents the first operational step in its strategy for making central-bank money fit for a tokenized financial system. The ECB said the system will initially provide a core set of services before expanding its functionality and operating hours.
Deutsche Bank, Santander, Société Générale, the European Investment Bank and other major financial institutions are among the initial participants. The ECB said 13 market participants and four distributed-ledger operators had completed onboarding, with additional institutions expected to connect in the coming months. ECB data showed the initial group includes both banks and operators of blockchain-based financial infrastructure.
The initiative addresses a key issue for tokenized markets: how the cash leg of a blockchain-based securities transaction can be settled without relying exclusively on private stablecoins or commercial-bank deposits. Pontes allows the payment side of eligible wholesale transactions to settle in central-bank euros, which the ECB describes as a risk-free settlement asset.
The launch builds on the Eurosystem’s 2024 distributed-ledger technology experiments, when 64 market participants took part in more than 50 trials examining how transactions conducted on blockchain networks could be settled using central-bank money. The ECB said those experiments demonstrated the importance of central-bank money for the development of tokenized financial markets.
The ECB is also preparing to become an investor in tokenized securities. Reuters reported that the central bank plans to invest a small portion of its €23 billion own-funds portfolio in highly rated, euro-denominated blockchain securities. The move would give the ECB direct experience with tokenized financial instruments.
Pontes forms part of a broader ECB strategy known as Appia, which is focused on developing the infrastructure, standards and governance needed for a European tokenized financial ecosystem. The ECB plans to gradually extend Pontes’ operating hours and capabilities, with 24/7 availability targeted for 2028. The ECB’s Appia strategy sets out the longer-term framework for integrating tokenized markets with the Eurosystem.
The move puts the ECB among major central banks adapting their settlement infrastructure to blockchain-based financial markets. Rather than creating a separate cryptocurrency for settlement, the Eurosystem is using distributed-ledger technology to extend access to the euro’s existing central-bank settlement asset.
For Europe’s financial markets, the significance is broader than a blockchain pilot: central-bank money is becoming part of the infrastructure through which tokenized securities can settle.