The European Central Bank (ECB) has approved a two-pronged strategy to enable the settlement of distributed ledger technology (DLT) transactions using central bank money—a move that could significantly modernize Europe’s financial infrastructure.
The first initiative, named Pontes, will provide a short-term solution by connecting blockchain-based DLT platforms with TARGET Services—the Eurosystem’s suite of financial tools that support payment and securities flows across the eurozone.
According to the ECB, a pilot for Pontes is set to begin by the end of the third quarter of 2026. The pilot will draw on insights from the ECB’s 2024 exploratory DLT trials, which included over 50 experiments and participation from 64 institutions, to evaluate a unified settlement system using central bank money.
“This decision reflects the Eurosystem’s ongoing commitment to fostering innovation while maintaining safety and efficiency in financial market infrastructures,” the ECB stated.
The second track adopts a long-term approach
The second track, named Appia, takes a long-term perspective with the goal of building an integrated European ecosystem that enables secure and efficient operations on a global scale. Under Appia, the ECB will continue to explore the use of DLT in wholesale central bank settlements, working in close collaboration with both public and private sector partners.
To support ongoing development, the Eurosystem will establish dedicated market contact groups for both Pontes and Appia. These groups will ensure continuous engagement with industry stakeholders and provide a platform for feedback. A call for expressions of interest to join the Pontes group will be issued shortly.
This initiative comes amid a broader global push by central banks to harness blockchain technology for streamlining settlement systems while retaining control over monetary flows.
In 2023, the Bank of England, in collaboration with the BIS Innovation Hub in London, conducted a successful experiment using DLT for large-scale interbank transactions. The test showcased a prototype that could enhance real-time gross settlement (RTGS) systems by linking them with other financial infrastructures and distributed ledgers—promising faster, more cost-effective settlements.
DLT Trials Highlight Strong Demand for Central Bank Money
The ECB has released a report outlining the findings from its recent exploratory work with distributed ledger technology. The report revealed a strong market appetite for settling tokenized assets in central bank money, noting that €1.6 billion (approximately $1.88 billion) was settled during the trials, which involved 64 participants from across Europe.
The findings indicate that DLT has the potential to reduce “fragmentation, complexity, and technological inefficiencies” in capital markets by enabling atomic and programmable settlement.
However, the report also emphasized the importance of establishing common standards, harmonized legal frameworks, and creating an interoperability link with TARGET Services as soon as possible.
