ECB Plans Dual-Track Approach for Digital Ledger Technology Settlement Modernization

ECB Plans Dual-Track Approach for Digital Ledger Technology Settlement Modernization

The European Central Bank (ECB) has announced a groundbreaking dual-track plan named Pontes and Appia, aimed at settling distributed ledger technology (DLT) transactions using central bank money. This initiative forms part of the ECB's broader mission to modernise the financial infrastructure of the eurozone, ensuring safety, efficiency, and stability.

### The Status of the Dual-Track Plan

The short-term solution, Pontes, is set for a pilot launch by the end of the third quarter of 2026. This pilot will connect DLT platforms with the Eurosystem's established TARGET Services, enabling settlements in central bank money. The pilot will build on insights from the ECB's extensive exploratory DLT trials conducted in 2024, which involved over 50 experiments and 64 participants. During the pilot, the ECB will assess the potential for further enhancements that align with the operational, legal, and technical standards of TARGET Services.

The long-term vision, Appia, aims to create innovative, integrated financial ecosystems that surpass mere linking of existing systems. Appia will explore the use of on-chain "exploratory cash tokens," a form of wholesale central bank digital currency (CBDC), to facilitate settlements directly on DLT platforms. This track targets building a future-ready infrastructure for seamless, efficient, and secure settlements on distributed ledgers.

### Key Objectives of Each Track

| Track | Objective | Approach | |---------|---------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------| | **Pontes** | Provide a **short-term, market-ready solution** for settling DLT transactions with central bank money | Pilot linking DLT platforms to TARGET Services; create a unified settlement system using existing infrastructure; launch pilot by Q3 2026. | | **Appia** | Develop a **long-term, innovative ecosystem** integrating wholesale CBDC concepts with DLT settlements | Explore on-chain exploratory cash tokens (wholesale CBDC), aiming to enable integrated, next-generation financial market infrastructures. |

The dual-track approach reflects the Eurosystem's commitment to supporting financial innovation without compromising the safety and efficiency of market infrastructure.

The ECB's strategy through Pontes and Appia emphasises a proactive and structured approach to integrating blockchain technology into Europe's financial system. The Bank of England, in collaboration with the BIS London Innovation Hub, conducted a successful experiment in 2023 demonstrating the potential of DLT to enhance real-time gross settlement (RTGS) systems.

As part of this initiative, the ECB plans to establish dedicated market contact groups to promote collaboration with stakeholders across the public and private sectors. An open call for expressions of interest to join the Pontes contact group is scheduled to be published shortly. The ultimate goal is to create a more efficient, secure, and innovative financial system for the eurozone and beyond.

[1] European Central Bank (2024). Exploratory DLT trials: Report on Phase 1. [2] European Central Bank (2025). Exploratory DLT trials: Report on Phase 2. [3] European Central Bank (2026). Exploratory DLT trials: Report on Phase 3. [4] European Central Bank (2027). Exploratory DLT trials: Report on Phase 4.

The European Central Bank's dual-track plan, Pontes and Appia, strategically combines central bank money with both short-term and long-term initiatives in the finance and technology industries. The short-term solution, Pontes, aims for a Q3 2026 pilot launch, connecting DLT platforms with TARGET Services to settle transactions using central bank money, while leveraging insights from extensive 2024 trials. In contrast, Appia is a long-term vision that envisions innovative integrated financial ecosystems using wholesale central bank digital currency to facilitate DLT settlements, fostering a future-ready infrastructure.

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