ECB launches Pontes platform to link payment system with blockchain

The European Central Bank launched a new service this week 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. 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 (DBKGn.DE), Santander (SAN.MC) ​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. “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 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. 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 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.