ECB Prepares to Invest in Tokenized Securities

The European Central Bank (ECB) has begun preparatory work to invest a small share of its own funds in tokenized securities. This move is intended to give the ECB hands-on experience as an investor and build institutional knowledge about distributed ledger technology in financial markets.

The ECB's own funds portfolio generates income that helps cover operating expenses, apart from costs tied to carrying out supervisory duties. The step also backs the Eurosystem strategy of preparing central bank money for the digital age.

The purchases will be settled in central bank money through Pontes, a Eurosystem solution for settling tokenized assets in central bank money launched on the same day as the announcement. The first investments will target euro-denominated securities issued by euro area central governments, regional governments, agencies, and European supranational institutions.