As central banks seek to counter the rise of privately issued digital currencies, the ECB’s DLT settlement initiative lays the groundwork for integrating tokenised finance into Europe’s monetary infrastructure.
The European Central Bank has announced a two-pronged strategy to enable settlement of distributed ledger technology (DLT) transactions in central bank money, amid mounting regulatory pressure on privately issued stablecoins.
The initiative, approved by the ECB’s Governing Council on June 30, will see the Eurosystem pursue a short-term pilot project and a parallel longer-term development track.
The move reflects a growing effort by central banks to reassert their role in the rapidly evolving digital finance landscape, where stablecoin adoption and decentralised platforms are challenging traditional monetary frameworks.
The first track, dubbed Pontes, will provide a temporary solution linking DLT platforms to the ECB’s existing TARGET Services infrastructure. The central bank aims to launch a pilot phase by the end of the third quarter of 2026.
The second track, Appia, will explore the creation of a fully integrated, DLT-native settlement ecosystem designed to serve both European and global financial markets.
The twin initiatives follow extensive experimentation by the Eurosystem in 2024, which involved more than 60 market participants and over 50 trials. A report summarising the outcomes of that exploratory work was published alongside the ECB’s latest announcement.
“The decision confirms our commitment to settlement in central bank money while embracing new technology,” the ECB said in a statement. “Pontes and Appia will enable us to support innovation without compromising safety or efficiency.”
Growing private/public sector tension
The ECB’s intervention comes at a time when central bankers are stepping up their warnings about stablecoins.
ECB President Christine Lagarde, speaking to the European Parliament’s Committee on Economic and Monetary Affairs last week, described stablecoins as a growing threat to monetary policy transmission and financial stability.
She singled out Tether, the largest stablecoin issuer, citing concerns about its lack of regulatory oversight and jurisdictional vulnerabilities.
The Bank for International Settlements echoed those concerns in a sweeping report released shortly before Lagarde’s remarks. The BIS argued that stablecoins fail three fundamental tests for sound money: singleness, elasticity and integrity. It warned that the growth of stablecoins could lead to a fragmented monetary system reminiscent of 19th-century “free banking,” undermining trust and efficiency.
Are CBDC’s a display of control?
Against this backdrop, the ECB’s dual-track approach to DLT settlement appears designed to futureproof its role in financial market infrastructure.
While stablecoin issuers promise speed, cost-efficiency and 24/7 availability, central banks are increasingly focused on ensuring that new forms of money remain anchored to public trust and regulatory clarity.
Pontes will offer a transitional bridge for DLT use cases, allowing experimentation to continue under the umbrella of TARGET standards. It is expected to accommodate wholesale transaction models, including tokenised securities settlement and cross-border payments.
Appia, by contrast, will be geared towards building a native DLT settlement layer within the Eurosystem’s long-term architecture.
Both tracks will be supported by dedicated market contact groups. The ECB said it would soon issue a call for expressions of interest to join the Pontes group, inviting feedback from public and private stakeholders.
The projects also align with broader efforts to develop a Digital Euro. Lagarde has described the ECB’s retail CBDC programme as a strategic priority, aimed at safeguarding monetary sovereignty and reinforcing Europe’s bank-based financial system. The DLT settlement strategy extends that philosophy into wholesale markets, where private innovation has moved faster than public infrastructure.
The BIS has proposed its own blueprint for a “unified ledger” that would support tokenised versions of central bank reserves, commercial bank deposits and government securities. Under this model, financial transactions could be executed automatically via smart contracts, allowing for instant collateral transfers, real-time cross-border settlement and programmable tax payments.
The ECB has not committed to such a structure but has signalled openness to deeper integration. Its phased approach through Pontes and Appia suggests a strategy of cautious engagement with new technologies, rather than outright competition with private providers.
