The Eurosystem launched Pontes on Monday, giving banks a live route to settle tokenized assets in central-bank money.

The European Central Bank (ECB) simultaneously began preparations to invest a small portion of its own funds in tokenized securities, with those purchases set to settle through Pontes. The move puts the ECB on both sides of Europe’s emerging tokenized-market infrastructure, providing the settlement rail while preparing to invest through it.

Pontes connects distributed-ledger market platforms with the Eurosystem’s existing TARGET settlement services, allowing tokenized securities transactions to complete using central-bank money. An initial group including Deutsche Bank, Santander, Société Générale and the European Investment Bank has completed onboarding, alongside DLT operators such as Clearstream, Axiology, Cashlink and SWIAT. More institutions are expected to connect over the coming months.

André Dragosch, Bitwise Europe Head of Research, described the system as effectively the “digital euro made available for banks,” allowing financial institutions to settle tokenized transactions with each other while retaining central-bank money as the settlement asset.

That characterization reflects the role Pontes could play in wholesale markets, where access to risk-free settlement money has been one obstacle to moving securities onto distributed ledgers. The Eurosystem’s 2024 DLT trials found that public- and private-sector participants viewed such access as critical to wider adoption.

The system launches with a limited set of services and will add functionality and longer operating hours over time, with full implementation targeted for 2028. The ECB has yet to identify a completed live settlement since Monday’s launch, leaving transaction activity as the next measure of whether the infrastructure gains traction beyond institutions that have already connected.

The ECB’s planned investment program moves the project beyond providing infrastructure by giving the central bank direct exposure to the transaction lifecycle it is asking financial institutions to adopt.

Initial purchases will focus on euro-denominated tokenized securities issued by euro-area central governments, regional governments, agencies and European supranational institutions. The ECB said using Pontes will give it experience spanning trade execution, settlement, technology systems and portfolio management.