On Tuesday, the European Central Bank (ECB) unanimously approved a two-pronged strategy to leverage distributed ledger technology (DLT) for settling transactions using central bank money. The initiative holds potential for modernizing Europe’s financial systems.
### First Prong: Pontes (Short-Term Solution)
The ECB’s first track, named Pontes, focuses on integrating DLT platforms with the existing TARGET2-Securities (T2S) framework, a core suite of payment and securities settlement services operated by the Eurosystem.
A pilot phase for Pontes is scheduled to commence by the end of 2026’s third quarter. This pilot program will build upon the ECB’s 2024 exploratory DLT trials, which involved over 50 experiments and 64 European participants, testing a unified settlement system underpinned by central bank money.
ECB literature highlighted this decision as reinforcing the Eurosystem’s commitment: “supporting innovation without compromising on safety and efficiency in financial market infrastructures
.”
### Second Prong: Appia (Long-Term Vision)
The second track, Appia, adopts a longer perspective. Christened with the aim of creating “an integrated ecosystem in Europe that also facilitates safe and efficient operations at the global level,” Appia will continue research into wholesale central bank settlement applications via DLT.
Collaboration with public and private partners is central to this effort. The Eurosystem is establishing market contact groups for both Pontes and Appia to solicit feedback and engage with stakeholders. A call for participation in the Pontes group is anticipated shortly.
### Broader Context
This initiative aligns with global central bank exploration into blockchain technology’s capacity to streamline settlement processes while retaining oversight.
Last year, the Bank of England, through its BIS Innovation Hub in London, successfully piloted DLT integration into large-scale interbank transactions (RTGS). The demonstration showed potential for expediting settlements and lowering associated costs by interlinking various financial infrastructures.
### Trial Findings Reinforce Interest
A concurrent ECB report detailing its DLT exploratory work confirmed substantial market interest in tokenized assets settled using central bank money. Trials logged €1.6 billion ($1.88 billion) settled during 2024’s 64-participant European experiments.
The findings indicated DLT could mitigate “fragmentation, complexity and technological inefficiencies” through atomic, programmable settlement. Nevertheless, standardized protocols and harmonized legal frameworks, along with “interoperability link with TARGET Services as soon as feasible,” remain identified prerequisites.
CoinDesk attempted to secure commentary from the ECB but received no response by the publication deadline.
