ECB Greenlights Dual-Track Strategy for DLT Transactions Using Central Bank Funds

The European Central Bank (ECB) Governing Council has approved a groundbreaking two-phase initiative to integrate central bank money with distributed ledger technology (DLT) transactions. The immediate-term solution, codenamed 'Pontes,' will bridge DLT platforms with Eurosystem's TARGET services before 2026, ensuring seamless cross-border movement of cash, securities, and collateral across Europe.

ECB Executive Board member Piero Cipollone emphasized that while DLT and tokenization remain emerging technologies, they 'hold significant potential to revolutionize financial transaction settlement.' The decision aligns with the Eurosystem's commitment to fostering innovation while maintaining robust financial market infrastructure security.

For long-term implementation, the ECB has proposed its 'Appia' framework. This global-level approach will evaluate advanced DLT solutions through collaboration with public and private sector stakeholders, including potential applications in foreign exchange settlement and international financial initiatives. The central bank stressed its commitment to enhancing market efficiency and competitiveness without compromising security standards.

The announcement comes as the ECB targets October 2025 to complete its digital euro preparation phase, though legislative concerns persist following technical disruptions in the TARGET2 system earlier this year. The bank's 2024 exploratory phase engaged 64 institutions conducting over 50 DLT-based experiments, forming the foundation for both Pontes and Appia initiatives.