The Eurosystem has launched Pontes, a system allowing banks to settle trades in tokenised assets using central bank money, and the ECB said it will invest some of its own funds in tokenised securities through it, the first concrete steps towards making the euro fit for the digital age.
Launched on Monday, Pontes lets wholesale transactions in tokenised assets, meaning stocks, bonds and other instruments recorded as digital tokens on distributed ledgers, to settle in the safest form of money available — reserves held at the central bank itself.
Initial participants include Deutsche Bank, Santander, Société Générale, KfW, the European Investment Bank, alongside four ledger operators including Clearstream.
The ECB also intends to become a user of Pontes. In a separate announcement, it said it has begun preparatory work to invest a small portion of its own funds in tokenised securities, with purchases settled through Pontes.
Pontes itself will only reach full capability, with longer operating hours and enhanced features, by 2028.
Pontes is aimed at banks and markets, not consumers. The retail equivalent, the digital euro, would let the public make everyday payments directly in central bank money. The European Parliament’s economic committee approved its position in June, opening negotiations with member states, and final legislation is targeted for the end of this year.