ECB launches Pontes for tokenized asset settlement

The European Central Bank launched Pontes on Monday as part of the Eurosystem's strategy for tokenized finance. Pontes allows financial institutions to settle wholesale tokenized asset transactions in central bank money, providing an alternative to private settlement assets such as stablecoins. The system initially offers a core set of services. Its services and operating hours will expand gradually, with full implementation expected by 2028 and more participants expected to join. Tokenization represents assets as digital tokens, typically on distributed ledger technology networks. The ECB said tokenization could make wholesale transactions faster and more efficient by combining issuance, trading, settlement, custody and servicing on a single platform. The ECB also said smart contracts could enable automation. ECB Executive Board member Piero Cipollone said Pontes brings the stability and trust of central bank money to Europe's tokenized finance ecosystem and could help it scale. Pontes builds on the Eurosystem's 2024 tests of settling distributed-ledger-based transactions in central bank money. The ECB said participants in those tests identified access to a risk-free settlement asset as crucial for wider adoption of tokenized finance. The Eurosystem is also developing Appia, a complementary initiative exploring an integrated ecosystem for distributed-ledger-based financial services. A blueprint for Appia is expected by 2028.