ECB plans to buy tokenized bonds with its own funds

The European Central Bank (ECB) plans to invest a small portion of its reserves in tokenized securities, giving the central bank direct exposure to blockchain-based financial markets.

The purchase would be settled through Pontes, the new Eurosystem platform, which allows wholesale transactions to settle in central bank money. The platform essentially bridges the ECB’s payment system to blockchain-based financial markets. The plan to invest in tokenized securities and Pontes reflects a more significant bid by central banks in the EU to adapt to the increasing use of blockchain in finance.

The ECB intends to test the technology as an investor, from buying tokenized bonds to settlement and portfolio management.

“Pontes brings the stability and trust of central bank money to the European tokenized finance ecosystem,” said Piero Cipollone, member of the ECB’s executive board. “It will give an important advantage to help it scale.”

The ECB’s initial investments would focus on euro-denominated securities issued by euro-area governments, regional authorities, agencies and European supranational institutions.

The central bank’s executive board will decide the size, timing and operational details of the investments once the preparatory work is complete. The decision will depend partly on the development of tokenized securities issuance and Europe’s wider tokenized finance market.

Pontes is the first part of the Eurosystem’s strategy to bring central bank money into tokenized finance. The ECB plans to add services and longer operating hours over time, with full implementation expected by 2028.