ECB launches Pontes and starts work to buy tokenised public-sector bonds

The Eurosystem opened Pontes on Monday, a settlement link that lets wholesale trades in tokenised assets be paid in central-bank euros rather than in a commercial-bank claim or a stablecoin. In the initial phase it is charging only one-off connection fees: €2,500 for market participants and €15,000 for ledger operators, with no monthly or settlement charges. Piero Cipollone, a member of the ECB’s Executive Board, said the service “will give an important advantage to help it scale.” In August he said Pontes would make private settlement assets convertible, so tokenised deposits could move between banks and stablecoins could be settled in fiat on a distributed ledger. In May he put the alternative more bluntly: without tokenised central-bank money, tokenised markets could still expand using private settlement assets. Pontes is a wholesale cash rail for institutions that already have access to T2, the Eurosystem’s real-time gross settlement system.

How Pontes settles a trade

Pontes connects market distributed-ledger platforms to the Eurosystem’s TARGET Services. Participants can finish the cash leg in one of two ways: as cash tokens on a Eurosystem distributed ledger, or in T2. At launch, legal finality for that cash leg still arrives only when the matching payment completes in T2. Isabel Schnabel, another Executive Board member, said in late August that finality would later sit on the Eurosystem ledger itself.

The synchronisation layer is the Hash-Link protocol, which keeps delivery-versus-payment atomic: the securities move and the cash move both complete, or neither does. Pontes opens at 8:00 Central European Time, and the window in which all transaction types can be processed runs from 9:00 to 16:00. Authorised central securities depositories, including those that settle in T2S, the Eurosystem’s securities settlement platform, can join as operators under a derogation from the T2S framework. The cash leg still finishes in T2, not in T2S.

An initial group has completed onboarding and, the ECB said, is ready to use the service immediately. The market participants are ABANCA, BayernLB, Caisse des Dépôts et Consignations, Cecabank, Deutsche Bank, Deka Bank, DZ Bank, the European Investment Bank, KfW, Memo Bank, NRW.BANK, Santander and Société Générale. The ledger operators are Axiology, Cashlink, Clearstream and SWIAT. Deutsche Bundesbank has onboarded as a market participant. Additional names have committed to connect in the coming months.

Clearstream, the post-trade arm of Deutsche Börse, ran end-to-end tests before the launch, including delivery-versus-payment in central-bank money. Euroclear was not among the operators named on Monday. It is preparing a separate tokenised short-term debt market with Banque de France, Project Pythagore, which aims to issue the first tokenised notes in Negotiable European Commercial Paper, France’s short-term debt market, by the end of 2026 and to settle the cash leg through Pontes.

Monday did not change the securities in a European government-bond fund, how those bonds settle, or the fee the fund pays.

The ECB as a buyer of tokenised paper

In a second decision on Monday, the ECB said it had started preparatory work to invest “a small portion” of its own-funds portfolio in tokenised securities, with those purchases to settle in central-bank money through Pontes. It disclosed neither an amount nor a share. The Executive Board will set the operational details and the timing only after that groundwork is done.

The portfolio’s returns help pay the bank’s running costs, excluding banking supervision. At the end of 2025 it was valued at €23.1 billion, up €0.4 billion on the year, and consisted almost entirely of euro-denominated securities. Government debt was 73% of the book. In October 2024 the ECB had already begun putting a small share into equity ETFs that track Paris-aligned benchmarks.

The tokenised purchases, when they come, will focus on euro-denominated securities issued by euro-area central governments, regional governments, agencies and European supranational institutions. No CUSIP, no issuer and no country was named.

An ECB estimate put the amount outstanding of euro-denominated debt with some digital exposure, a wider net than paper issued on a distributed ledger, at around €2 billion at the end of 2025. The bank has not said how small a small portion of the €23.1 billion book will be. It said the eventual size will take account of how tokenised issuance develops. An April ECB study found tokenised bonds issued at a yield spread 0.14 percentage points lower than matched conventional bonds and looked more liquid, with no visible cut in operational costs as measured by underwriting fees. Two-thirds of the issuers in that sample were in Germany.

The 2028 build-out

Monday’s service is a core set of functions. The ECB said enhanced features and longer operating hours will arrive gradually, with full implementation expected by 2028. Cipollone’s August roadmap was more specific: extend hours to 22.5 per business day and offer immediate settlement finality on the Eurosystem ledger, then, by mid-2028, 24/7 operation, more programmability and multi-currency capability. Smart contracts sit in that later layer.

Appia, a public-private design project with the Eurosystem, Danmarks Nationalbank and other stakeholders, aims for a blueprint in 2028. It shares a July 2025 Governing Council decision with Pontes. Both grew out of 2024 experiments that involved 64 market participants in more than 50 trials.

The Bank of England is running a 2026 lab on synchronised settlement against earmarked central-bank funds, after tests under Project Meridian Securities. The Swiss National Bank’s Project Helvetia is due to run at least until June 2028, piloting a wholesale digital franc on the SIX Digital Asset Platform and a link from a ledger to traditional central-bank money in the SIC payment system. In the United States, DTCC said in July it had processed production trades in tokenised representations of assets it already holds, with a Tokenization Service due in October.

Whether Monday produces live trades is now a question for the banks that onboarded. The test for Euroclear is whether Pythagore’s first issues at the end of 2026 settle their cash through Pontes. The ECB’s Executive Board has yet to set a size and a date for the tokenised purchases.