The European Central Bank (ECB) has launched Pontes, a new settlement service designed to allow banks and other financial institutions to settle transactions involving tokenised assets using central bank money.

The initiative represents a major step in the Eurosystem’s efforts to adapt Europe’s financial infrastructure to blockchain and distributed ledger technology (DLT). Pontes connects DLT-based financial markets with the Eurosystem’s existing TARGET Services, providing a direct settlement route in central-bank-backed euros.

Pontes Connects Blockchain Markets With Central Bank Money

Tokenisation involves representing financial assets as digital tokens recorded on distributed ledgers. The technology could allow several stages of a transaction — including issuance, trading, settlement and custody — to be combined and automated.

The ECB said one of the key obstacles to wider adoption has been the lack of a trusted settlement asset on DLT networks. Pontes is intended to address that gap by allowing wholesale transactions to settle in central bank money, rather than relying on private digital currencies or other settlement assets.

Designed for Banks and Financial Institutions

Pontes is aimed at the wholesale financial market, rather than consumers making everyday payments.

Banks, securities firms and market infrastructures will gradually join the system. Institutions including Deutsche Bank, Santander and Clearstream are among the early participants, according to Reuters. The service initially operates during standard business hours, with additional features and longer operating times planned as the system develops.

The ECB expects the platform to expand gradually in response to market demand and technological developments, with full implementation planned by 2028.

ECB Begins Investing in Tokenised Securities

Alongside the launch, the ECB has started preparatory work to invest a small portion of its own funds in tokenised securities.

The initial investments will focus on euro-denominated securities issued by euro-area governments, regional authorities, agencies and European supranational institutions. Transactions will be settled through Pontes, giving the central bank direct practical experience with the technology.

The ECB said the investments will help it understand the full investment process, from executing trades to settlement, systems management and portfolio administration.

A Step Toward a Digital Financial Infrastructure

ECB President Christine Lagarde said the initiative is part of the Eurosystem’s broader effort to create a more integrated and resilient European financial market suited to the digital economy.

The central bank has been examining DLT-based settlement for several years. In 2024, the Eurosystem conducted 50 exploratory trials involving participants from nine jurisdictions, with transactions worth approximately €1.6 billion. Those experiments helped shape the design of Pontes.

The results indicated that financial institutions considered access to a safe, risk-free settlement asset important for broader adoption of tokenised finance.

Pontes Is Separate From the Digital Euro

The launch of Pontes is also distinct from the ECB's plans for a retail digital euro.

While the digital euro is being developed as a potential form of digital cash for consumers and businesses, Pontes is focused on wholesale financial transactions between institutions.

The two projects are nevertheless part of a broader strategy to strengthen the role of the euro in a more digital financial system. The ECB is also developing Appia, a longer-term initiative aimed at creating a more integrated tokenised financial ecosystem in Europe.

Why Tokenised Finance Matters

Financial institutions have been increasingly experimenting with tokenised bonds, funds and other securities.

Supporters of the technology say tokenisation could make markets faster and more efficient by reducing manual processes, improving automation and potentially allowing transactions to settle more quickly.

For the ECB, however, the settlement side is particularly important. Without central bank money or another trusted settlement asset, institutions may have to depend on private forms of digital money when completing tokenised transactions.

Pontes provides a public-sector settlement anchor for that emerging market.

Europe Moves Further Into Blockchain-Based Finance

The launch puts the Eurosystem among central banks experimenting with ways to connect traditional financial infrastructure with blockchain-based markets.

The ECB said Pontes will initially offer a core set of services before being expanded over time. The gradual rollout is intended to allow the Eurosystem and market participants to gain experience while the technology and underlying financial ecosystem continue to develop.

The initiative also forms part of Europe's wider effort to maintain efficient and competitive financial markets as digital technologies reshape how securities are issued, traded and settled.

A New Chapter for the Euro in Digital Finance

Pontes does not replace Europe's existing payment and settlement infrastructure. Instead, it creates a bridge between traditional systems and emerging DLT-based financial markets.

For banks and institutional investors, that could provide a more familiar and trusted way to participate in tokenised markets. For the ECB, it offers an opportunity to gain first-hand experience with technology that could become increasingly important to global finance.

As Pontes expands toward full implementation by 2028, the project will help determine how quickly tokenised securities can move from experimental use into mainstream financial markets — and how effectively Europe's central bank infrastructure can support that transition.

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