Europe launches Pontes for tokenized transactions on DLT
The Eurosystem has launched Pontes, a distributed-ledger settlement solution that connects market DLT platforms with TARGET Services, allowing wholesale transactions in tokenised assets to settle in central bank money. The launch moves a technology tested in controlled trials into live market infrastructure and marks the first operational step in the Eurosystem’s wider strategy for tokenised finance.
The significance lies in the cash leg of a digital-asset trade. Tokenised bonds and other instruments can be issued and transferred on distributed ledgers, but large institutions still need a settlement asset that is safe, liquid and legally robust. Pontes gives eligible banks and market infrastructures access to central bank money for that purpose, reducing reliance on private settlement assets and helping preserve the monetary system’s public anchor as markets adopt new technology.
Pontes is wholesale market infrastructure, not the retail digital euro proposed for everyday payments. Its users are eligible financial institutions and market infrastructures, and its purpose is to modernise the settlement plumbing behind large-value transactions rather than provide a new consumer payment instrument.
Pontes combines features from three interoperability solutions tested by the Eurosystem in 2024, an exercise that involved 64 participants and more than 50 trials and experiments. Its dual settlement model lets transactions settle either with cash tokens on the Eurosystem DLT platform or through T2, the euro area’s real-time gross settlement system. For delivery-versus-payment and other all-or-none transactions, a Hash-Link mechanism synchronises the movement of cash and assets across platforms, while completion in T2 provides settlement finality and legal certainty.
The launch already has a meaningful institutional base. Thirteen market participants — including Deutsche Bank, Santander, Société Générale, the European Investment Bank and several public-sector banks — have completed onboarding, alongside DLT operators Axiology, Cashlink, Clearstream and SWIAT. That early participation matters because network infrastructure becomes more useful as issuers, banks and market operators connect to the same settlement rails.
The ECB is also preparing to become a user of the new infrastructure. It plans to invest a small portion of its own-funds portfolio in euro-denominated tokenised securities issued by euro-area public bodies and European supranational institutions, with purchases settled through Pontes. The move should give the central bank first-hand operational experience across trading, settlement, systems and portfolio management — and sends a notable signal that tokenisation is moving beyond experimentation.
For banks, the immediate opportunity is to connect tokenised issuance, trading and settlement more tightly. Processes that are now split among several systems and reconciled manually could increasingly be automated end to end, including through smart contracts. That could shorten settlement chains, reduce operational errors and collateral frictions, and make it easier to develop services around tokenised securities and wholesale payments without giving up central bank money settlement.
The shift also has strategic weight. A common Eurosystem bridge can limit the risk that separate national or private DLT networks develop into incompatible silos. By linking new platforms to existing TARGET infrastructure, Pontes could support deeper European capital markets, improve resilience and give banks a shared base on which to compete. It may also strengthen Europe’s strategic autonomy by keeping key settlement functions under European governance as tokenised markets scale.
The launch is deliberately gradual. Pontes begins with a core set of services and an initial group of eligible T2 participants and regulated DLT operators, with more institutions expected to connect over time. The ECB says features and operating hours will expand in stages, with full implementation expected by 2028. In parallel, the Appia initiative is working toward a broader blueprint for an integrated European tokenised financial ecosystem, including common standards and possible future configurations for central bank money and collateral services across DLT networks.
Pontes will not by itself guarantee mass adoption. Banks must still justify investment in new systems, integrate them with compliance and risk controls, and navigate evolving legal, regulatory and interoperability standards. Benefits will depend on market liquidity, the volume of tokenised issuance and the willingness of institutions to redesign processes rather than simply replicate legacy workflows on a new ledger.
Even so, the launch changes the industry’s starting point: settlement in central bank money is no longer confined to conventional rails. If adoption grows, Pontes could become a foundational layer for tokenised deposits, securities and cross-platform payments, pushing banks to modernise treasury, custody and post-trade operations while giving them a safer route into programmable finance. The Eurosystem has therefore moved the debate from whether tokenised wholesale markets can connect to public money to how quickly institutions can build viable services on top of that connection.
