ECB plans to invest reserves in tokenized securities via Pontes

The European Central Bank plans to invest a small portion of its reserves in tokenized securities, giving it direct exposure to blockchain-based financial markets. The investments' size and timing will be determined after preparatory work. Purchases would be settled through Pontes, a new Eurosystem platform that allows wholesale transactions to settle in central bank money and connects the ECB's payment system with blockchain-based financial markets. The ECB intends to test the technology as an investor through activities including buying tokenized bonds, settlement and portfolio management. Piero Cipollone, a member of the ECB's executive board, said Pontes would bring the stability and trust of central bank money to Europe's tokenized finance ecosystem and help it scale. Initial investments would focus on euro-denominated securities issued by euro-area governments, regional authorities, agencies and European supranational institutions. Pontes is expected to be fully implemented by 2028.