The European Central Bank is inviting banks to help shape standards for tokenized securities, pairing Pontes’ new settlement service with a longer-term plan for a wider European market.
ECB Executive Board member Piero Cipollone made the appeal in an Oct. 21 presentation to the Italian Banking Association. The Eurosystem launched Pontes on Sept. 21 to link market networks using distributed ledger technology, or DLT, with its settlement services. The connection gives wholesale trades involving tokenized assets a route to settle using central bank money. At launch, the ECB listed 13 market participants, plus the Deutsche Bundesbank, which was also onboarded in that capacity, and four DLT operators. It said they were ready to use Pontes; the announcement gave no completed transaction-volume figure.
Cipollone described possible services banks could build, including automated asset servicing, faster collateral transfers and exchanges that deliver securities and payment in one transaction. He said potential gains could include lower issuance costs for issuers, a broader investor base and less liquidity tied up as banks move collateral. His presentation did not quantify prospective savings or identify who would bear adoption costs.
Since March 30, marketable assets issued at central securities depositories through DLT-based services have been able to qualify as collateral for Eurosystem credit operations, subject to existing eligibility rules and availability for settlement in eligible securities settlement systems. The ECB is considering whether to extend eligibility to assets outside those systems.
Appia addresses the risk that separate, incompatible networks could deepen fragmentation in European financial markets, according to the ECB’s roadmap. The initiative follows Eurosystem exploratory work in 2024 involving 64 participants in more than 50 trials and experiments. The ECB said 127 respondents provided feedback on its Appia roadmap. It plans to bring market participants into practical design work from 2027 and aims to produce a blueprint by 2028.
