The ECB's Project Pontes aims to connect distributed ledger technology (DLT) platforms with TARGET Services, enabling wholesale transactions to settle in central bank money while preserving legal certainty and financial stability
The European Central Bank (ECB) is preparing to launch Project Pontes, a new interoperability layer designed to connect market-operated distributed ledger technology (DLT) platforms with the Eurosystem's TARGET Services. The initiative is intended to allow wholesale financial transactions recorded on DLT systems to settle in central bank money, without replacing the existing euro settlement infrastructure. Instead, Pontes aims to provide a controlled bridge between emerging DLT markets and established payment rails, addressing a key challenge for institutions seeking to tokenize assets while maintaining access to the safest form of settlement.
How Pontes Connects DLT and Central Bank Money
Project Pontes operates as an interoperability mechanism, enabling tokenized securities to remain on eligible DLT platforms while coordinating the cash settlement leg through the Eurosystem's DLT solution and the T2 real-time gross settlement (RTGS) system. Market participants can choose between two settlement routes: using cash tokens issued on the Eurosystem DLT platform, which are backed by interaction with T2, or settling directly in T2 RTGS. In both cases, finality for the cash leg is achieved only when the transaction is completed in T2, preserving the role of central bank money as the anchor for wholesale settlement.
The system uses a Hash-Link protocol to synchronize delivery versus payment (DvP) and other all-or-none transactions, ensuring that asset transfers and payments are executed together. This reduces the risk of one side of a transaction settling without the other and introduces greater automation and integration with T2, minimizing manual intervention in the settlement process.
Lessons From Eurosystem DLT Experiments
Pontes builds on exploratory work conducted by the ECB and euro-area national central banks between May and November 2024. During this period, three interoperability solutions were tested: Deutsche Bundesbank's Trigger Solution, Banca d'Italia's TIPS Hash-Link, and Banque de France's Full DLT Interoperability solution (DL3S). These trials involved 64 participants and more than 50 experiments, including real central-bank-money settlements and tokenized government and corporate securities use cases. Notably, Slovenia completed its first digital sovereign bond issuance during these tests. The ECB has consolidated lessons from all three approaches into a single solution, rather than maintaining separate settlement routes.
Eligibility for Pontes covers assets, market participants, and DLT operators. Participants generally need access to T2, while eligible DLT operators may include authorized central securities depositories, entities under the EU DLT Pilot Regime, regulated payment-system operators, and other qualifying financial institutions. The ECB Governing Council approved the use cases and eligibility criteria for Pontes on December 4, 2025, with operational and legal frameworks to be published in line with the pilot's launch.
Market Impact and Implementation Timeline
The initial pilot for Project Pontes is scheduled to go live by the end of the third quarter of 2026, with phased implementation expected to expand functionality over time. The ECB has positioned Pontes as a short-term solution, explicitly stating that it is not intended to replace TARGET Services or turn them into a public blockchain. Instead, Pontes is designed to support innovation in tokenized wholesale finance while maintaining the stability and efficiency of central bank settlement infrastructure.
For U.S. readers, the ECB's approach highlights a growing trend among major central banks to experiment with DLT-based settlement mechanisms that preserve legal certainty and systemic stability. Similar efforts to streamline on-chain settlement infrastructure for institutional transactions have been seen in other regions, such as the integration of stablecoin payment rails described in recent coverage of AI-driven stablecoin payment solutions.
According to the ECB, the Pontes pilot will initially focus on wholesale transactions involving tokenized assets, with eligibility and operational details evolving as the project matures. The Eurosystem's broader strategy also includes Project Appia, which explores a longer-term integrated financial ecosystem built around tokenization and DLT, including programmability and smart contracts for central bank operations.
During the 2024 exploratory phase, the ECB reported that 64 participants conducted over 50 trials, including real central-bank-money settlements and tokenized government and corporate securities transactions. The pilot's phased rollout is expected to provide further data on the operational, legal, and technical challenges of integrating DLT with central bank settlement systems.
DLT-based settlement platforms introduce new possibilities for asset recording and transfer, but the ECB's approach with Pontes underscores the importance of maintaining a direct link to central bank money for financial stability. By anchoring tokenized wholesale transactions to established settlement infrastructure, Pontes aims to support market innovation without fragmenting the settlement layer that underpins the euro area's financial system.
