The European Central Bank (ECB) has approved a two-track initiative to use central bank money for settling transactions on distributed ledger technology (DLT) platforms, marking a significant step toward modernizing Europe’s financial infrastructure.
This decision supports the Eurosystem’s commitment to fostering innovation while upholding the security and efficiency of financial market infrastructures.
Two-Track Strategy for DLT Integration
The ECB’s approach consists of two complementary tracks: one focused on near-term solutions and the other on long-term structural development.
Pontes: Short-Term Settlement Solutions
The first track, named Pontes, is designed to provide short-term settlement solutions by connecting blockchain-based DLT platforms with TARGET Services. TARGET Services is a set of financial services developed and operated by the Eurosystem to facilitate payments and securities transactions across the euro area.
The Pontes pilot is scheduled to launch by the end of the third quarter of 2026. It will build on insights gained from the ECB’s 2024 exploratory trials on DLT, which included over 50 experiments and 64 participants testing unified settlement mechanisms using central bank funds.
Appia: Long-Term Ecosystem Development
The second track, Appia, adopts a long-term perspective aimed at developing an integrated European ecosystem that also supports secure and efficient operations at a global level.
Under Appia, the ECB will continue its research into the application of DLT in wholesale central bank settlements while collaborating closely with public and private sector partners.
The Eurosystem will also establish market contact groups for both Pontes and Appia to maintain dialogue with industry stakeholders and gather feedback. A call for participation in the Pontes group will be announced soon.
Global Context of Central Bank DLT Initiatives
The ECB’s initiative reflects a broader trend among central banks worldwide exploring how blockchain technology can streamline settlement processes while maintaining control over monetary flows.
In 2023, the Bank of England successfully tested large-scale interbank transactions using DLT through an experiment conducted with the BIS Innovation Hub in London. The prototype demonstrated that connecting Real-Time Gross Settlement (RTGS) systems with other financial infrastructures and ledgers could reduce costs and increase processing speed.
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Key Findings from ECB’s DLT Trials
The ECB also published a report summarizing the results of its recent exploratory work on DLT. The trials, which involved 64 participants from across Europe, settled €1.6 billion ($1.88 billion) in tokenized assets and confirmed strong market demand for using central bank money in DLT-based settlements.
Findings indicated that DLT could reduce fragmentation, complexity, and technical inefficiencies in capital markets by enabling atomic and programmable settlements.
However, the report highlighted the need for standardized legal frameworks and urged “interoperability links with TARGET Services as soon as possible.”
Frequently Asked Questions
What is the goal of the ECB’s DLT settlement system?
The system aims to enhance the efficiency and security of financial settlements in Europe using blockchain technology, while ensuring interoperability with existing infrastructure like TARGET Services.
When will the Pontes pilot begin?
The pilot is expected to launch by the end of Q3 2026, incorporating insights from previous DLT trials conducted by the ECB.
How does DLT improve settlement processes?
DLT enables atomic settlements—where transactions are finalized immediately and irreversibly—reducing counterparty risk, operational costs, and processing delays.
Will this affect everyday users of the euro?
Initially, the system is designed for wholesale and institutional settlements. Retail users may indirectly benefit from increased system efficiency and stability over time.
What are the main challenges identified?
Key challenges include establishing legal clarity, ensuring interoperability between systems, and standardizing technical and regulatory frameworks across jurisdictions.
How is the ECB addressing industry feedback?
The ECB plans to form market contact groups to engage with private sector participants, gather input, and align development with market needs.