Europe’s push to enable settlement of DLT-based transactions in central bank money is moving from experimentation to implementation, with the European Central Bank launching a twin-track programme – Pontes and Appia – to bring tokenised settlement closer to reality.
Speakers at FIA’s Brussels Forum earlier this month said the shift marks a significant step beyond recent exploratory trials, signalling growing confidence that distributed ledger technology can address long-standing inefficiencies in Europe’s collateral and settlement landscape.
“Digital innovation is about using new technologies to improve services and to improve interconnection,” said Efthimia Kefalea, director and head of derivatives clearing development at Eurex. “DLT cannot be used for everything, but it is very good at interconnecting things. We all know we have a fragmented market around collateral and that's where we have started, working with our partners and our clients.”
Kefalea pointed to Eurex’s participation in the ECB’s 2024 exploratory programme to test the settlement of DLT-based transactions in central bank money via three interoperability solutions provided by the central banks of France, Italy and Germany.
The initiative brought together 64 participants, including central banks, financial market participants such as Eurex, and DLT platform operators, to engage in over 50 trials and experiments. Those trials involved real settlements in central bank money and experiments focused on mock transactions, providing valuable insights into the technical and operational feasibility of the proposed interoperability solutions, as well as business, operational and legal insights on the use cases tested.
“This pilot programme had a lot of flexibility,” Kefalea said. “Participants brought their own use cases and tested them across the three European solutions. We developed our own learnings and could see how DLT solutions for central bank money work. It was an exciting time, and we really appreciated the effort that the team at the ECB invested in this.”
From trials to implementation
Fiona van Echelpoel, deputy director general at the ECB, said the central bank initially intended to conduct time-limited trials, publish findings on the exploratory work and then assess next steps. Strong market demand, however, accelerated the process.
“We had over 60 participants – market participants, central banks, CCPs, CSDs and DLT operators – and they were very enthusiastic,” she told the audience. “Even before we reached the end of the work, we were told: ‘You have to keep going because things are changing.’”
Although Europe already has a DLT Pilot Regime with authorised entities, van Echelpoel noted that they lack a tokenised settlement asset that is safe and risk-free, like tokenised central bank money.
“That inspired us to launch two workstreams under a single programme – Pontes and Appia, the bridge and the road,” she said.
The short-term track, Pontes, will provide a Eurosystem DLT-based solution linking DLT platforms with TARGET Services to enable settlement of euro-denominated transactions in central bank money.
Pontes builds on features tested during the 2024 exploratory work and is positioned as a practical bridge between existing market experiments and the traditional settlement backbone used by euro area banks.
Pontes is expected to go live as a pilot later this year, a timeline Kefalea described as exceptional. “A year after testing, we have a short-term solution we can actually use,” she said. “That’s a speed of light for any central bank.”
The longer-term track, Appia – named after one of the Roman Empire’s most important trade roads – will focus on designing a future-ready integrated ecosystem for tokenised assets.
The ECB plans to publish a launch paper on Appia in the first quarter of 2026, outlining its longer-term vision for DLT, tokenisation and central bank money settlement.
“We want to have an integrated system where different types of tokenised assets can come together, be they stablecoins, tokenised deposits or tokenised central bank money,” van Echelpoel said.
The ECB hopes these initiatives will also help tackle a question of autonomy. If the euro area does not provide a widely available settlement asset for DLT markets, the void could be filled by non-European solutions. This could leave the euro area’s financial sector using infrastructure and standards set elsewhere and weaken the euro’s position in digital finance.
Risks and opportunities
Other topics discussed on the panel included the risks and opportunities associated with new technologies. Max Briens, EMEA head of derivatives clearing product and institutional account management at JPMorgan, outlined three areas of risk as markets move towards 24/7 operating models.
“The first concerns the control, resiliency and recovery agenda,” he said. “If you’re moving to a model where you operate 24/7 but do not have the right way to recover when an issue happens – and issues always happen – there will need to be a considerable amount of effort and upgrading in terms of the way market infrastructure operates.”
The second risk is data dependency. “Most clearing firms operate on a T+1 basis today. You reconcile, you fix issues and move on. You don’t have that luxury in a T+0 market, so there’s going to be much more reliance on making sure that the data is accurate,” Briens said.
“The third area of risk, which is very much something we live and breathe every day, is cyber security and making sure that the environment is even more robust than it is today, because the number of challenges that we face in this space is ever-increasing.”
At the same time, new technologies offer opportunities to manage risk more dynamically and reduce costs, the panellists agreed.
“New technology gives us the opportunity to trade 24/7 and manage risk more effectively if the collateral rails are right,” said Mark Woodward, global head of compliance and regulatory affairs at GFO X, a centrally cleared trading venue for digital asset derivatives. “If positions can be collateralised in real time rather than waiting until Monday morning, that lowers costs and enables product innovation that isn’t possible under existing rails.”
While regulatory, operational and technical hurdles remain, speakers in Brussels say Europe is entering a more decisive phase in integrating new technologies into its financial architecture. What began as exploratory work is increasingly translating into practical initiatives, reflecting a broad willingness among policymakers and market participants to modernise infrastructure in step with innovation.
