Eurosystem brings central bank money to tokenised finance

The Eurosystem introduced Pontes, a new solution enabling wholesale transactions in tokenised assets to be settled using central bank money. This initiative is the first under the Eurosystem’s strategic programme aimed at modernising central bank money for a tokenised financial future. Christine Lagarde, ECB President, emphasised the goal of fostering a more integrated and resilient European financial market through innovation and collaboration with market participants.

Tokenisation involves representing assets as digital tokens on distributed ledger technology (DLT) networks, which can streamline processes such as issuance, trading, settlement, custody, and servicing. The Eurosystem’s 2024 DLT tests confirmed that access to a risk-free settlement asset is essential for broader adoption of tokenised finance. Pontes will initially provide core services, with enhancements and extended operating hours to be introduced gradually, targeting full implementation by 2028.

Pontes leverages the stability and trust of central bank money to support the scaling of Europe’s tokenised finance ecosystem. Piero Cipollone, ECB Executive Board member, highlighted its potential to give Europe a competitive edge in financial services transformation. An initial group of market participants and DLT operators, including major banks and institutions, has already completed onboarding and is ready to use Pontes immediately.

The Eurosystem will continue to expand Pontes in response to market needs, while also advancing Appia, an integrated ecosystem for DLT-based financial services. Appia involves experimentation and analytical work with Danmarks Nationalbank and public-private stakeholders, aiming to deliver a blueprint by 2028. Additional participants, including the Deutsche Bundesbank, are committed to connecting in the coming months.