ECB Unveils Pontes System for Tokenized Asset Settlement
Europe's central banks have launched 'Pontes', a new system that enables wholesale transactions in tokenized assets to settle in central bank money. The platform, which went live on Monday, will allow large institutions to trade in stocks, bonds, and other instruments recorded as digital tokens on distributed ledgers.
The absence of a risk-free settlement asset has been one of the main barriers holding back blockchain technology. Without it, tokenized trades have typically settled in commercial bank money or stablecoins, carrying credit risk that large institutions are reluctant to accept.
Pontes will initially run within existing market hours, but its long-term goal is to support continuous settlement, potentially 24/7. The system has already been onboarded by 13 institutions, including Deutsche Bank, Santander, and Société Générale, alongside four ledger operators.
The European Central Bank (ECB) intends to become a user itself and will invest a small portion of its own funds in tokenized securities through Pontes. The initial focus will be on euro-denominated debt issued by euro area governments and regional authorities.