The European Bank (ECB) has launched Pontes, a system that allows financial institutions to settle wholesale tokenized asset transactions in central bank money, providing an alternative to private settlement assets such as stablecoins.

The ECB announced the launch on Monday, Sept. 21, in an official statement as part of the Eurosystem's strategy for tokenized finance. The system initially offers a core set of services, with full implementation expected by 2028. Wholesale refers to dealings between financial institutions rather than payments by the general public, placing Pontes in the category of institutional market infrastructure rather than consumer-facing payment systems.

Tokenization represents assets as digital tokens, typically on distributed ledger technology (DLT) networks — shared digital databases maintained across multiple participants. The ECB said the approach could make wholesale transactions faster and more efficient by combining issuance, trading, settlement, custody and servicing on a single platform, while enabling automation through smart contracts, programs that automatically execute the terms of an agreement on the ledger.

“Pontes brings the stability and trust of central bank money to the European tokenised finance ecosystem,” ECB Executive Board member Piero Cipollone said. “It will give an important advantage to help it scale.”

Pontes, whose name is the Latin word for “bridges,” builds on the Eurosystem's 2024 tests of settling DLT-based transactions in central bank money. According to the ECB, participants in those tests identified access to a risk-free settlement asset as crucial for the wider adoption of tokenized finance.

Central bank money is a direct claim on the central bank and is widely regarded as a risk-free settlement asset. Private settlement assets such as stablecoins, by contrast, are liabilities of their issuers, meaning holders depend on an issuer's ability to honor redemptions. Settling wholesale DLT transactions in central bank money is therefore seen as a way to reduce counterparty risk in tokenized markets.

The Eurosystem — which comprises the ECB and the national central banks of the euro area member states — is also developing Appia, a complementary initiative exploring an integrated ecosystem for DLT-based financial services, with a blueprint expected by 2028. Read together, the two initiatives outline the Eurosystem's dual track into tokenized finance: Pontes supplies the settlement infrastructure, while Appia is intended to map how a broader DLT-based market ecosystem could be organized around it, with both reaching key milestones by 2028.

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