Eurosystem Brings Central Bank Money to Tokenized Finance (ECB)
The European Central Bank (ECB) launched Pontes to enable wholesale transactions in tokenized assets to be settled in central bank money via Trans-European Automated Real-time Gross Settlement Express Transfer (TARGET) Services. Operating as a consolidated interoperability solution, Pontes integrates the strengths of the Eurosystem’s 2024 exploratory trials. It features a dual settlement model that allows participants to settle the cash leg of transactions either directly in T2 (the Eurosystem’s real-time gross settlement system) via application programming interface (API) based triggers, or on the Eurosystem distributed ledger technology (DLT) platform utilizing cash tokens (DLT-based central bank money representing tokenized TARGET balances) and dedicated DLT wallets. The Hash-Link protocol is specifically utilized to ensure secure, synchronized delivery versus payment (DvP) across platforms. Pontes will initially offer a core set of services, with enhanced features and extended operating hours introduced gradually toward full implementation by 2028. [ECB]
ECB to Invest Part of Own Funds in Tokenized Securities, with Settlement via Pontes (ECB)
The European Central Bank (ECB) is initiating investments of its own funds in tokenized, euro-denominated public sector securities to build institutional expertise in distributed ledger technology (DLT). Transactions will settle in central bank money via the Eurosystem’s newly launched Pontes solution, supporting the broader Appia initiative for a European tokenized financial ecosystem. [ECB]
BTW if you want to see a complete database of my DFC-related posts going back years, including many that didn’t make the Daily Digest cut, click here.
FYI I produce a monthly digest of digital fiat currency (DFC) developments exclusively for the official sector (e.g., central banks, ministries of finance and international financial institution (e.g., the BIS, IMF, OECD, World Bank)) plus academics and firms that are active in the DFC space (commercial banks, technology providers, consultants, etc.). (DFCs include central bank digital currency (CBDC), stablecoins and tokenized deposits.) It goes out via email on the first business day of every month, and if you’re interested in being on the mailing list, please email me at john@kiffmeister.com.