ECB to Invest Own Funds in Tokenized Securities Using New Pontes Settlement Service

The European Central Bank is preparing to invest a small portion of its own funds in tokenized securities, with transactions to be settled via Pontes, a newly launched Eurosystem service, CoinDesk reported. The ECB said the move is designed to give the central bank hands-on experience as an investor and to deepen its familiarity with trading, settlement and portfolio management processes for tokenized assets that use distributed ledger technology. The first transactions will be backed by "locked" euro bonds. According to the announcement, the initial offerings will consist of euro-denominated tokenized securities issued by eurozone governments, public institutions and European-level supranational entities. The underlying instruments will remain conventional securities such as bonds, while issuance or registration is migrated to a distributed ledger. The ECB did not disclose the investment size or a timeline for purchases. It said its Executive Board will set operational details and a schedule once preparations are complete, taking into account the pace of tokenized issuance in Europe and broader market conditions. Pontes is part of the Eurosystem's push to modernize digital financial infrastructure and align central bank money with digital-era settlement needs. The ECB said the service consolidates three previously tested systems into a single platform, allowing settlement either with cash tokens or through the Eurosystem's T2 payment system. Technically, Pontes will use the HashLink protocol to synchronize asset transfers with payment flows and reduce manual steps through automation. The ECB said the setup is intended to help participating institutions further develop their services while preserving the anchoring role of central bank money in the financial system. The ECB's direct participation comes as tokenized finance activity broadens globally. Pontes will run alongside Appia, a blueprint initiative for Europe's tokenized finance ecosystem. JPMorgan submitted an application in May for a tokenized Ethereum money market fund, New York Life Investment Management launched a tokenized bond fund in June, and India introduced a pilot program for tokenized corporate bonds earlier this month. For now, the ECB is concentrating on public-sector and supranational bonds and expects limited exposure, but deploying its own funds is seen as a step beyond testing toward real-world use within financial market infrastructure. The ECB also said the relevant transactions will be settled through Pontes as part of its broader effort to build a digital settlement framework for central bank money.