The European Central Bank launched a wholesale settlement service named Pontes that links distributed ledger technology platforms directly to the Eurosystem’s TARGET payment services. Activated on business days between 8 a.m. and 4 p.m. CET, Pontes enables financial institutions to settle tokenized asset transactions using central bank money rather than private alternatives like stablecoins or commercial bank deposits.
How Pontes Bridges Blockchain and TARGET Services
Pontes acts as a settlement layer connecting privately operated distributed ledger platforms with the Eurosystem’s established payment infrastructure. By integrating with TARGET services, the platform allows banks and market operators to issue, trade, and settle tokenized securities while clearing the cash leg in central bank euros. According to the European Central Bank, this infrastructure reduces credit risk compared to commercial bank money, which carries the credit risk of the intermediary holding the funds. Executive Board member Piero Cipollone noted that settling outside central bank money risks exposing participants to price volatility and credit exposures.
Initial Participants and Operational Parameters
A first group of financial institutions completed onboarding ahead of the launch, including Deutsche Bank, Santander, and clearing giant Clearstream, which is owned by Deutsche Börse. At launch, the platform operates on business days from 8 a.m. to 4 p.m. CET. Legal settlement finality for the cash side currently anchors in the existing TARGET2 system, though future iterations are expected to introduce smart contract functionality and shift finality directly onto a Eurosystem-operated distributed ledger platform.
Central Bank Investment in Digital Securities
Alongside the infrastructure launch, the European Central Bank announced it will begin investing a portion of its €23 billion own funds portfolio into blockchain-based securities. These investments focus on highly rated, euro-denominated debt issued by public institutions, following a push by Executive Board member Isabel Schnabel for central banks to adopt on-chain assets and reduce reliance on private alternatives. Other European central banks are pursuing similar tracks, such as the Swiss National Bank running Project Helvetia and the Bank of England operating its Digital Securities Sandbox, as the bloc separately targets a retail digital euro for potential launch by 2029.