The European Central Bank has launched preparatory work to invest a small portion of its own funds in tokenised securities . The initiative will provide practical experience as an investor and build institutional expertise in distributed ledger technology (DLT) for financial markets.
The initiative supports the Eurosystem’s strategy to make central bank money fit for the digital age. Pontes , the Eurosystem’s solution for settling tokenised assets in central bank money, was launched today. The Appia initiative will deliver a blueprint for a tokenised financial ecosystem in Europe.
The ECB will gain first-hand experience across the full investment lifecycle, including trade execution, settlement, systems and portfolio management activities. Purchases will be settled in central bank money through Pontes. The ECB’s own funds portfolio is a non-monetary policy portfolio that provides income to help fund operating expenses, excluding costs related to supervisory tasks.
Initial investments will focus on euro-denominated securities issued by euro area central governments, regional governments, agencies and European supranational institutions. Once preparatory work is complete, the ECB’s Executive Board will determine the operational details and timing. Its decision will take into account developments in tokenised issuances and the broader tokenised financial ecosystem in Europe.