On September 21, the Eurosystem launched Pontes for wholesale transactions in tokenized assets, allowing them to settle in central bank money. Pontes provides a settlement link for tokenized financial instruments instead of relying on a private settlement asset.

An initial group of banks and distributed-ledger technology operators has completed onboarding and is ready to use it, according to the ECB.

The European Central Bank also said it had begun preparing to invest a small portion of its own-funds portfolio in tokenized securities, with purchases set to settle through Pontes.

Pontes goes live for onboarded banks and DLT operators

Pontes is intended for wholesale activity, where banks and market-infrastructure operators handle transactions in instruments represented on distributed ledgers. Euronews reported that the mechanism can be used to settle tokenized stocks, bonds and other instruments through central-bank reserves, addressing the absence of a risk-free settlement asset that has limited broader blockchain adoption in financial markets.

For the initial participants, the practical change is access to a central-bank-money settlement mechanism for eligible tokenized transactions. The ECB did not specify the number of onboarded banks or DLT operators in its launch announcement.

ECB to settle tokenized-securities purchases through Pontes

The ECB is positioning itself as an early user of the infrastructure. It said it had started preparations to invest a small share of its own-funds portfolio in tokenized securities, with Pontes to handle settlement.

The initial investments are planned in euro-denominated securities issued by euro-area public authorities and European supranational institutions, the ECB said. The announcement did not state the size of the planned allocation or provide a timetable for purchases.

TARGET Services link and the path to 2028

Pontes is designed to connect market DLT platforms with the Eurosystem's TARGET Services, providing what the ECB describes as a central-bank-money settlement anchor for tokenized finance. That design places the new service alongside the Eurosystem's existing payments and settlement infrastructure rather than leaving tokenized-market settlement entirely within separate ledger networks.

The system will not arrive with its full intended functionality on day one. The ECB expects enhanced features and longer operating hours to be introduced gradually, with full implementation targeted for 2028.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.