ECB Launches Pontes Service for Tokenized Asset Settlement
The European Central Bank (ECB) has launched its Pontes service, allowing banks to settle wholesale tokenized asset trades in central bank money. The euro side of the trade is tied back to TARGET rather than a private token or correspondent account. This move is seen as progress towards a more integrated European market by ECB President Christine Lagarde.
Piero Cipollone, the Italian economist on the ECB Executive Board and chair of the Eurosystem's digital euro task force, described Pontes as bringing stability and trust of central bank money into Europe's tokenized finance ecosystem. The ECB notes that this is the first operational step in a longer program.
The Pontes service connects privately run distributed ledgers to TARGET services, enabling market participants to buy tokenized instruments on commercial platforms and pay for them in central bank money. Finality sits in T2 or in tokenized central bank money on the Eurosystem's own ledger, depending on the model.
Initially, the Pontes service will operate during TARGET business hours (about 09:00 to 16:00 CET), but the ECB plans to extend this to around 22.5 hours a day by 2027 and 24/7 operation by mid-2028. Extra features will be added in the same steps.
The ECB has onboarded an initial group of banks, including Deutsche Bank, Santander, Société Générale, Deka Bank, DZ Bank, BayernLB, the European Investment Bank, and KfW. The first DLT operators include Clearstream, Cashlink, SWIAT, and Axiology.
The fees for using Pontes will start as one-off onboarding charges, not per-trade tariffs. The ECB has also announced that it will put a small slice of its own funds into tokenized euro public-sector paper and settle those purchases through Pontes.
Pontes is not the household digital euro, which is still in testing and requires legislation. It is also not a substitute for Appia, the longer design exercise due to produce a blueprint for a tokenized European market by 2028.