Anchoring Tokenised Finance in Central Bank Money
Infrastructure rarely attracts attention until it is needed, and on 21 September 2026 the European Central Bank opened a piece of infrastructure that Europe's financial markets are likely to need far more than is commonly appreciated. On that date the Eurosystem launched Pontes, named after the Latin word for bridges, a service that allows banks and market infrastructures to settle wholesale transactions in tokenised assets in central bank money, the safest form of the euro.
Thirteen banks and public lenders, including Deutsche Bank, Santander, Société Générale, KfW and the European Investment Bank, have already completed onboarding, while four platforms, among them Deutsche Börse's Clearstream, are connected as ledger operators. On the same day, the ECB announced that it would invest a small portion of its own funds in highly rated euro-denominated tokenised securities, with those purchases also settled through Pontes.
The significance of this step extends well beyond Frankfurt, because it addresses a fundamental question: as shares and bonds increasingly move onto distributed ledgers, in what form of money will they be paid for? Should the answer be private stablecoins, most of which are denominated in dollars, Europe would gradually cede control of its market plumbing to others. Should the answer be central bank money, the euro would retain its role as the anchor of the system.
Pontes is the right initiative, introduced at the right time, and the ECB deserves credit for delivering an operational service rather than a further consultation document. The value of any settlement infrastructure, however, lies in the volume it carries. Three considerations support the case for Pontes: it supplies the risk-free settlement asset that tokenised markets have lacked, it strengthens the euro's position while settlement conventions are still being formed, and its phased design is pragmatic. Each consideration also points to conditions the Eurosystem must meet if the service is not to remain underused by 2028.
The first consideration is that Pontes supplies the element that tokenised markets have most clearly lacked. A tokenised bond transaction has two legs, the transfer of the bond to the buyer and the transfer of cash to the seller, and the central promise of the technology is that both legs settle simultaneously so that neither party is left exposed. Until now, the cash leg has generally been settled in commercial bank money or in stablecoins, both of which carry issuer credit risk, and this has been a principal reason for the caution of large institutions. The Eurosystem's 2024 trials reached the same conclusion, as participants identified access to a risk-free settlement asset as essential for wider adoption, and Pontes is a direct response to that finding.
The second consideration is monetary sovereignty, which in practical terms is the question of who sets the rules of the market. The principal risk is a form of infrastructure dollarisation, a gradual process in which tokenised markets come to settle by convention in dollar stablecoins because these are the most liquid instruments available. Euro-denominated stablecoins account for only about 0.3 per cent of global supply, while the United States, through the GENIUS Act of 2025, is actively encouraging the spread of dollar tokens. Because liquidity tends to concentrate where it already exists, a euro alternative must be offered before market conventions become entrenched, and Pontes places central bank euros on the table within that window. Public settlement alone will not resolve the matter, however.
A Eurosystem that offers central bank money while keeping regulated euro stablecoins under tight restrictions risks pushing private demand offshore towards dollar tokens. The more durable model is one in which supervised euro stablecoins and tokenised deposits operate around a public anchor, settling against central bank money rather than competing with it, and Pontes is the infrastructure that makes such a model possible. Managed in this way, the combination of public and private initiatives could allow Europe to lead in wholesale tokenised finance ahead of the United States, where the Federal Reserve remains cautious about anything resembling a digital currency.
The third consideration is that the design is pragmatic, although its phasing carries a cost that should not be understated. Pontes does not require banks to replace their existing systems; it connects their ledgers to TARGET Services, the payment infrastructure they already use daily. The service is being introduced in stages: it currently operates only between 08:00 and 16:00 Central European Time, access is confined to banks and regulated market infrastructures, and continuous operation is not expected before 2028.
A gradual rollout is a prudent way to manage operational risk in core infrastructure, but each month of restricted hours leaves evening and weekend settlement to private tokens that operate around the clock. The ECB's decision to commit its own resources partly offsets this. Its intention to purchase tokenised securities issued by euro area governments, agencies and European supranational institutions for its non-monetary own-funds portfolio will give the central bank direct experience of the full cycle of trading, settlement and portfolio management, and it signals to issuers that at least one credible, long-term investor will be present in the market.
Pontes therefore represents the right bridge in the right place, but infrastructure proves its worth only through use, and in the first weeks after launch the ECB had yet to confirm a completed live settlement. Ensuring that activity follows depends on four measures that the Eurosystem can take without waiting for new legislation.
First, the Eurosystem should accelerate the timetable for extended operating hours and publish firm dates, since a settlement service that closes at 16:00 effectively cedes evening and weekend activity to private tokens.
Second, it should progressively widen access to other well-regulated entities, such as central securities depositories, market infrastructures operating under the EU's DLT Pilot Regime and, in due course, supervised euro stablecoin issuers, so that private euro money settles against central bank money rather than competing with it.
Third, the ECB should begin its own-funds purchases promptly and transparently, and encourage public issuers such as KfW, the European Investment Bank and national debt management offices to issue tokenised bonds on a regular basis, since market participants will engage only once there is sufficient supply to trade.
Fourth, it should publish quarterly data on settlement volumes and participation, so that market participants and the public can assess whether Pontes is gaining traction.
At the launch, ECB President Christine Lagarde committed the Eurosystem to continued close collaboration with the market. If that commitment is matched by speed of execution, Pontes may come to be regarded as the point at which Europe chose to anchor its digital markets in its own currency. If progress proceeds at the measured pace typical of committee processes, the infrastructure will still be in place in 2028, but it risks being well engineered and little used, while activity settles on infrastructure governed elsewhere.
Sources:
European Central Bank. "Eurosystem Brings Central Bank Money to Tokenised Finance." Press release, September 21, 2026. https://www.ecb.europa.eu/press/pr/date/2026/html/ecb.pr260921~e754847a7b.en.html.
European Central Bank. "ECB to Invest Part of Own Funds in Tokenised Securities, with Settlement via Pontes." Press release, September 21, 2026. https://www.ecb.europa.eu/press/pr/date/2026/html/ecb.pr260921_1~5a011ecbea.en.html.
European Central Bank. "Pontes." TARGET Services. https://www.ecb.europa.eu/paym/target/pontes/html/index.en.html.
CoinDesk. "ECB Deploys Pontes Platform to Settle Wholesale Tokenized Assets in Central-Bank Money." September 21, 2026. https://www.coindesk.com/business/2026/09/21/ecb-deploys-pontes-platform-to-settle-wholesale-tokenized-assets-in-central-bank-money.
24/7 Wall St. "The ECB Just Launched a Way to Settle Tokenized Assets Without Stablecoins: What It Means for RLUSD and XRP in Europe." September 21, 2026. https://247wallst.com/investing/cryptocurrency/2026/09/21/the-ecb-just-launched-a-way-to-settle-tokenized-assets-without-stablecoins-what-it-means-for-rlusd-and-xrp-in-europe/.
Blockonomi. "ECB Launches Pontes to Settle Tokenized Assets in Central Bank Money." https://blockonomi.com/ecb-launches-pontes-to-settle-tokenized-assets-in-central-bank-money.
The Paypers. "ECB Launches Pontes to Link DLT Platforms with TARGET Services." https://thepaypers.com/fintech/news/ecb-launches-pontes-to-link-dlt-platforms-with-target-services.
William Fry. "Tokenisation in Ireland & the EU." https://williamfry.com/knowledge/tokenisation-in-ireland-the-eu.
Comments