ECB Launches Pontes Platform for Tokenized Euro Payments
The European Central Bank (ECB) has launched a new platform called Pontes, which will enable tokenized payments between banks in the eurozone. This marks the first step towards introducing a digital euro on wholesale financial markets.
Pontes uses decentralized ledgers to record transactions, but crucially, it does so using central-bank money. The system aims to make transactions faster and more efficient by compressing several steps into one.
The ECB is concerned that the dominance of US-dollar denominated stablecoins could ultimately lead to a loss of control over monetary policy. Stablecoins pegged to the US dollar account for up to 99% of what has been issued globally.
Pontes begins with about a dozen lenders, including Deutsche Bank and Société Générale, but additional participants are expected to join in the coming months. The trading hours will initially be limited to 8am-4pm but will eventually extend to 24/7 and year-round by 2028.
The ECB has committed to investing a small amount of its own funds in tokenized securities, allowing it to gain practical experience as an investor and build institutional expertise in the use of distributed ledger technology (DLT) in financial markets.