ECB Launches Pontes, as Digital Euro Moves Closer

The useful part

The Eurosystem simultaneously began preparing to invest a portion of its own funds in euro-denominated tokenized bonds, with purchases set to settle through the same system. The move puts the ECB on both sides of Europe's emerging tokenized-market infrastructure. Pontes lets tokenised assets settle in central bank money instead of commercial bank money.

How it works

• The ECB says this can make transactions faster by combining issuance, trading, settlement, custody and servicing into fewer steps.
• It is launching with a limited set of services, with more features and longer operating hours to be added over time.
• The first banks, financial institutions and DLT operators have already completed onboarding and can use Pontes.

Example or evidence

• Pontes builds on the Eurosystem's 2024 DLT settlement tests.

Details worth keeping

Smart contracts can also automate parts of the process. More participants are expected to join in the coming months. ECB Prepares to Buy Tokenized Bonds With Its Own Funds Initial ECB purchases will target euro-denominated tokenized securities issued by euro-area central and regional governments, agencies, and European supranational institutions.