• Pontes enables wholesale tokenised asset transactions to be settled in central bank money
• Launch marks first step in implementing the Eurosystem’s strategy for tokenised finance
• Banks and market infrastructures to join in a gradual approach

The Eurosystem launched Pontes, a solution that enables wholesale transactions in tokenised assets to be settled in central bank money. Pontes is the first initiative under the Eurosystem’s strategic programme to make central bank money fit for a tokenised future and to support the development of this rapidly evolving financial ecosystem.

“The Eurosystem is working to enable a more integrated, innovative and resilient European financial market in the digital age,” said Christine Lagarde, president of the ECB. “We will continue to make progress in close collaboration with the market.”

Tokenisation is the process of issuing or representing assets in the form of digital “tokens”, typically recorded on distributed ledger technology (DLT) networks. For wholesale financial markets, this technology has the potential to make transactions faster and more efficient by bundling multiple steps of an asset’s lifecycle – from issuance and trading to settlement, custody and servicing – and by enabling automation and the development of innovative solutions through smart contracts.

Pontes builds on the outcome of the Eurosystem’s 2024 tests using DLT for central bank money settlement, during which stakeholders from the public and private sectors indicated that access to a risk-free settlement asset was crucial for the wider adoption of this new technology. Pontes will initially offer a core set of services, to be expanded over time in line with market needs and technological developments. Enhanced features and longer operating hours will be introduced gradually, with full implementation expected by 2028.

“Pontes brings the stability and trust of central bank money to the European tokenised finance ecosystem,” said Piero Cipollone, member of the ECB’s Executive Board. “It will give an important advantage to help it scale.”

The market is already showing significant interest in Pontes. An initial group of market participants and DLT operators^[1] has completed onboarding and is ready to start using Pontes immediately. Additional participants are committed to connecting to Pontes in the coming months.

This engagement demonstrates confidence in the potential of this innovation to put Europe at the forefront of the transformation of financial services. The Eurosystem will support this transformation and continue to enhance Pontes in line with evolving market needs.

The development of an integrated ecosystem for DLT-based financial services continues under Appia, involving experimentation and analytical work by the Eurosystem, Danmarks Nationalbank and stakeholders from the public and private sectors, with the goal of delivering a blueprint by 2028.

Learn more about Pontes and the Eurosystem’s initiatives in tokenised finance by visiting the ECB’s website.

Source: ECB

ECB to invest part of own funds in tokenised securities, with settlement via Pontes

• ECB has launched preparatory work to gain practical experience with investments in tokenised securities and distributed ledger technology (DLT)
• Transactions to be settled in central bank money in Pontes, the Eurosystem’s settlement solution for DLT transactions
• Initial investments to focus on euro-denominated euro area public sector and European supranational securities

The European Central Bank (ECB) has launched preparatory work to invest a small portion of its own funds in tokenised securities. This will enable the ECB to gain practical experience as an investor and build institutional expertise in the use of distributed ledger technology (DLT) in financial markets. The own funds portfolio is a non-monetary policy portfolio that provides the ECB with income to help fund operating expenses, excluding those related to the delivery of its supervisory tasks.

This step will also support the Eurosystem’s strategy to make central bank money fit for the digital age. Key elements of this strategy are Pontes, the Eurosystem’s solution for settling tokenised assets in central bank money, which was launched today, and the Appia initiative, which will deliver a blueprint for a tokenised financial ecosystem in Europe.

Tokenised financial markets continue to evolve, alongside the development of new DLT-based market infrastructures. By investing directly, the ECB will gain first-hand experience across the full investment lifecycle, including trade execution, settlement, systems and portfolio management activities. The purchases will be settled in central bank money via Pontes.

Initial investments will focus on euro-denominated securities issued by euro area central governments, regional governments, agencies and European supranational institutions. Once the preparatory work has been completed, the ECB’s Executive Board will determine the operational details and timing of the investments, taking into account developments in tokenised issuances and the broader tokenised financial ecosystem in Europe.

Learn more about Pontes and the Eurosystem’s initiatives in tokenised finance by visiting the ECB’s website.

Source: ECB