Central Bank Money Reaches Tokenised Assets in Europe
The Eurosystem's Pontes, live since September 21, 2026, lets banks settle trades in tokenised assets in central bank money by linking digital ledgers to T2.
Photo source:
Asset services news
Assets Turned Into Digital Tokens
Tokenisation
converts an asset into a digital token, usually recorded on a distributed
ledger technology network, or DLT, which is a shared digital record kept across
many computers. In wholesale markets, the ECB says this can speed up
transactions by bringing several steps together: issuance, trading, settlement,
custody and servicing. Smart contracts, which are programs that run
automatically once set conditions are met, can automate parts of the process.
Settlement is the step where a trade is completed and the asset and the payment
change hands.
Linking Digital Ledgers to the Central Bank
Pontes
is the Eurosystem's DLT solution that links market DLT platforms and TARGET
Services to settle DLT-based wholesale transactions in central bank money.
Central bank money is money issued by a central bank, and the Eurosystem
describes it as the safest means of settlement. Market participants can settle
either on the Eurosystem DLT platform with cash tokens, or in T2, the
Eurosystem's real-time gross settlement system. Final settlement of the cash
leg, meaning the payment side of a trade, is reached once the matching
transaction is completed in T2.
Making Delivery and Payment Arrive Together
Transactions
that require delivery versus payment, where the asset and the payment change
hands together or not at all, are enabled through the Hash-Link protocol. The
Eurosystem says the protocol ensures secure and synchronised settlement across
platforms. Final settlement in T2 is described as providing legal certainty and
robustness. ECB Executive Board member Piero Cipollone said Pontes "brings
the stability and trust of central bank money to the European tokenised finance
ecosystem."
Who Is Using It Already
Any
entity with access to T2 can take part as a market participant, and the DLT
operators that can connect include central securities depositories, payment
system operators and licensed, supervised financial institutions. The banks
using Pontes at launch include ABANCA, BayernLB, Deutsche Bank, Deka Bank, DZ
Bank, KfW, Memo Bank, NRW.BANK, Santander and Société Générale. Caisse des
Dépôts et Consignations, Cecabank, the European Investment Bank and Deutsche
Bundesbank are also on the list, alongside the DLT operators Axiology,
Cashlink, Clearstream and SWIAT.
More Services by 2028, and an ECB Investment
Pontes
launched with a core set of services that the Eurosystem plans to expand over
time, with full implementation, enhanced features and extended operating hours
expected by 2028. On the same day, the ECB said it will invest a small portion
of its own funds in tokenised euro-denominated securities from euro area
central governments, regional governments, agencies and European supranational
institutions, settling the transactions through Pontes. The ECB said this will
give it "first-hand experience across the full investment lifecycle."
Its Executive Board will decide operational details and timing later.
You have exceeded your free limits for viewing our premium content
Please subscribe to have unlimited access to our innovations.
Get The Latest In Innovation
Join Our Newsletter
Where bold ideas find bold readers.
