ECB Launches Pontes Blockchain Link to Modernize Financial Market Connectivity
ECB's Strategic Move Towards Blockchain Integration
Introduction to Pontes and Its Purpose
FRANKFURT, Sept 21 (Reuters) - The European Central Bank launched a new service on Monday linking its payment system to blockchain-based financial markets and said it would invest some of its own money in digital securities.
The moves reflect a broader effort by central banks to adapt to the growing use of blockchain in finance, whereby assets are issued and traded using shared digital ledgers instead of traditional infrastructure.
Pontes: A New Settlement Service
The new service, known as Pontes, allows banks and investors to settle blockchain-based transactions using euros backed by the ECB, rather than stablecoins or other forms of private money.
The ECB said a first group of users, including Deutsche Bank, Santander and clearing giant Clearstream, had completed onboarding and would be able to use Pontes from the start.
The platform would initially operate between 8 a.m. and 4 p.m. CET (0600-1400 GMT) on business days and expand its services over time.
Potential Benefits of Blockchain Adoption
"This technology has the potential to make transactions faster and more efficient by bundling multiple steps of an asset's lifecycle... and enabling automation," the ECB said.
ECB's Investment in Blockchain-Based Securities
ECB to Invest in Bonds on Blockchain
The central bank said it would also begin investing a tiny part of its €23 billion own funds in blockchain-based securities, focusing on highly rated, euro-denominated debt issued by public institutions.
Last month, ECB board member Isabel Schnabel said central banks should "go on-chain", arguing this would reduce reliance on private alternatives.
Global Central Bank Blockchain Initiatives
Other Central Banks' Blockchain Projects
Other central banks are pursuing similar initiatives.
The Swiss National Bank is running Project Helvetia, which uses a wholesale digital currency to settle transactions in securities.
The Bank of England is testing blockchain use through its Digital Securities Sandbox.
The Digital Euro: Future Prospects
The ECB is also working on a digital euro for consumers, partly to wean the bloc off US credit cards, and aims to launch it in 2029.
Conclusion
(Reporting by Francesco CanepaEditing by Tomasz Janowski)
