The European Central Bank has started operating Pontes, a new link between market distributed ledger technology platforms and the Eurosystem’s TARGET Services. The setup is designed to let wholesale transactions in tokenized assets settle in central bank euros rather than outside existing central bank infrastructure.
The launch comes alongside a separate ECB plan to place a small share of its €23 billion own-funds portfolio into blockchain-based bonds. Together, the two moves show the central bank is expanding its work on tokenized finance while keeping settlement tied to established Eurosystem standards.
How Pontes works
Pontes connects DLT systems used by financial market participants with the Eurosystem’s TARGET infrastructure. That allows the cash leg of tokenized asset transactions to be settled in central bank money without requiring all securities activity to be moved onto a single blockchain network.
According to the ECB, the arrangement is meant to support wholesale market activity while preserving access to the existing settlement framework. At launch, legal settlement finality for the cash side remains in TARGET2, rather than on a blockchain-based system run directly by the Eurosystem.
First users and initial operating window
Deutsche Bank, Santander and securities clearing group Clearstream are among the first institutions to onboard to the platform and gain access. The ECB said Pontes will initially run from 8 a.m. to 4 p.m. CET on business days.
The central bank said those hours and the platform’s functions are expected to expand over time. Later versions are also expected to move settlement finality onto a Eurosystem-operated DLT platform and introduce smart contract capabilities.
Part of a broader tokenization strategy
The ECB said blockchain technology could speed up transactions and improve efficiency by automating processes across an asset’s lifecycle. Pontes follows earlier Eurosystem experiments involving wholesale central bank money settlement for DLT-based transactions.
It also fits into a wider policy push around tokenized finance, including Appia, the ECB’s plan for an integrated European tokenized financial system. The approach suggests the Eurosystem is trying to connect new market infrastructure with its existing payment and settlement rails rather than replace them outright.
Digital bond investment plan
Alongside the Pontes rollout, the ECB said it intends to allocate a small portion of its €23 billion own-funds portfolio to blockchain-based bonds. The planned purchases are to focus on highly rated euro-denominated debt issued by public institutions.
The central bank said those assets would still need to meet its existing eligibility and settlement requirements. For now, the confirmed next steps are gradual: Pontes is live with limited hours and an initial group of participants, while the digital securities allocation is framed as a partial investment within the ECB’s current portfolio rules.
Source: crypto.news