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ECB to invest small portion of own funds in tokenised securities via Pontes

The ECB plans initial purchases in euro-denominated securities from euro area central governments, regional governments, agencies and supranational institutions, with settlement in central bank money.

Reported · Written up by our desk · Central Banks

The European Central Bank has launched preparatory work to invest a small portion of its own funds in tokenised securities, aiming to gain practical investor experience and build institutional expertise in distributed ledger technology, or DLT, for financial markets, the ECB said.

The move also supports the Eurosystem strategy to make central bank money fit for the digital age, including Pontes, the Eurosystem settlement solution for tokenised assets in central bank money, and the Appia initiative for a blueprint of a tokenised financial ecosystem in Europe.

Under the plan, purchases would be settled in central bank money via Pontes. Initial investments are set to focus on euro-denominated securities issued by euro area central governments, regional governments, agencies and European supranational institutions.

After the preparatory work is completed, the ECB Executive Board will decide the operational details and timing of the investments, factoring in developments in tokenised issuances and the broader tokenised financial ecosystem in Europe.

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