ECB Approves Two-Track Plan for Blockchain Integration by 2026

The European Central Bank (ECB) has approved a two-track plan to integrate distributed ledger technology (DLT) into its payment systems, aiming to modernize Europe’s financial infrastructure. The first track, named Pontes, will focus on a short-term solution by linking blockchain-based DLT platforms with TARGET Services, a suite of financial services designed to facilitate the flow of payments and securities within the eurozone. A pilot for Pontes is expected to launch by the end of the third quarter of 2026, utilizing insights from the ECB’s exploratory DLT trials in 2024, which involved over 50 experiments and 64 participants. This pilot will test a unified settlement system in central bank money, aligning with the Eurosystem’s commitment to supporting innovation without compromising on safety and efficiency in financial market infrastructures.

The second track, called Appia, takes a longer-term approach, aiming to develop an integrated ecosystem in Europe that also facilitates safe and efficient operations at the global level. Appia will involve the ECB continuing to study DLT applications in wholesale central bank settlements while collaborating closely with public and private partners. The Eurosystem will also establish market contact groups for both Pontes and Appia to maintain dialogue with industry stakeholders and gather feedback. A call for expressions of interest to join the Pontes group will be published soon.

This initiative comes as central banks worldwide explore how blockchain can streamline settlements while maintaining control over money flows. In 2023, a Bank of England experiment successfully tested using DLT to run large-scale interbank transactions, demonstrating a prototype that could speed up and lower the costs of real-time gross settlement (RTGS) systems by linking them with other financial infrastructures and ledgers.

The ECB also published a report detailing the results of its recent DLT exploratory work. The report confirmed strong market demand for settling tokenized assets in central bank money, with 1.6 billion euros settled during trials involving 64 participants across Europe. The findings show DLT could reduce fragmentation, complexity, and technological inefficiencies in capital markets by enabling atomic, programmable settlement. However, it pointed out the need for standardization, harmonized legal frameworks, and an interoperability link with TARGET Services as soon as feasible.

The ECB's decision to pilot a blockchain-based euro settlement system by 2026 is a significant step towards modernizing Europe’s financial system. By integrating DLT into its payment systems, the ECB aims to enhance the efficiency and security of euro transactions. This initiative not only supports innovation but also addresses regulatory concerns, ensuring that the new system is robust and reliable. The structured approach, with clear implementation timelines, provides sufficient time for development and testing, setting a benchmark for other central banks evaluating similar upgrades. This move could potentially revolutionize financial market infrastructure and central bank digital currency implementation across Europe and beyond.