The European Central Bank (ECB) will test how it could settle Distributed Ledger Technology (DLT) with the central bank money in two tracks or phases. The first track “Pontes” will run a pilot project and will provide a short term offering to the market while the second track “Appia” will focus on bringing about a potential long-term solution.
The Pontes phase of the project which is set to be rolled out by the end of the third quarter of 2026, will try to find short term solutions by linking TARGET Services – a set of financial infrastructure systems operated by the Eurosystem (the European Central Bank and national central banks of Eurozone countries) to settle payments and transactions across Europe securely and efficiently.
Appia on the other hand will focus on a long-term approach for an innovative and integrated ecosystem in Europe that also facilitates safe and efficient operations at the global level. The Eurosystem will actively continue to analyse DLT-based solutions and collaborate with public and private stakeholders.
According to foreword written by Piero Cipollone, member of the executive board of the ECB, there has been a surge in interest across the financial sector for the distributed ledger technology (DLT) and tokenisation especially with the latest developments. Although the full implications are yet to be seen, “these technologies are likely to offer new ways of improving the settlement of financial transactions. They could also help address the shortcomings in today’s capital and payment markets ecosystem – namely fragmentation, complexity and technological inefficiencies – that are impeding progress towards a sustainable digital savings and investments union in Europe”, stated Cipollone.
Back in May and November 2024 the Eurosystem ran an explorative project where it sought to find how DLT could be used for settling wholesale transactions with central bank’s money. For this purpose, they engaged 64 market participants across different sectors and countries and explored a range of use cases by conducting trials involving real transactions as well as experiments using mock scenarios. Nearly €1.6 billion in central bank money was settled as part of this work.
