European Central Bank to launch blockchain-based euro settlement by 2026

The European Central Bank (ECB) is set to revolutionize eurozone financial infrastructure with a blockchain-powered settlement system, marking a major step toward integrating distributed ledger technology (DLT) into mainstream banking. The ECB announced plans to pilot the system, named “Pontes,“ by late 2026, aiming to bridge blockchain platforms with the eurozone’s core payment networks.

The European Central Bank expressed its commitment to innovation while ensuring financial stability. With this move, it hopes to streamline transactions, reduce costs, and position Europe as a leader in digital finance.

Pontes: A short-term DLT solution for euro settlements

The European Central Bank’s Pontes initiative will connect blockchain-based financial platforms with TARGET Services, the Eurosystem’s backbone for payments and securities. The pilot, launching in Q3 2026, builds on insights from the ECB’s 2024 DLT trials, which involved over 50 experiments and 64 participants.

According to the ECB, Pontes will provide a unified settlement system using central bank money, ensuring security and efficiency. “The decision aligns with our commitment to fostering innovation without compromising safety,” the bank stated.

Market demand for such solutions is clear—earlier trials saw €1.6 billion ($1.88 billion) settled via tokenized assets. The ECB’s report highlighted DLT’s potential to cut market fragmentation and enhance atomic settlements (instant, irreversible transactions).

Appia: The ECB’s long-term vision for global DLT integration

While Pontes offers an immediate fix, the European Central Bank is also working on Appia, a long-term project to create an integrated DLT ecosystem for wholesale settlements. Appia aims to facilitate seamless cross-border transactions while collaborating with global financial institutions.

The ECB will establish market contact groups for both Pontes and Appia, ensuring industry feedback shapes development. A call for Pontes participants will open soon, signaling the bank’s push for public-private cooperation.

Global central banks embrace blockchain

The European Central Bank isn’t alone in exploring DLT. In 2023, the Bank of England tested a blockchain prototype for interbank settlements, proving that DLT could speed up transactions and lower costs in real-time gross settlement (RTGS) systems.

Similarly, the Bank for International Settlements (BIS) has championed blockchain experiments, reinforcing the technology’s role in future finance. The ECB’s move aligns with this trend, positioning the eurozone at the forefront of digital financial infrastructure.

Standardization and regulation challenges

Despite the progress, the European Central Bank acknowledges hurdles. Its report stresses the need for standardized protocols, harmonized regulations, and interoperability with existing systems like TARGET Services.

The ECB also faces competition from private stablecoins and decentralized finance (DeFi) platforms. By introducing central bank-backed settlement, it aims to maintain control over monetary flows while fostering innovation.

Europe’s financial future

The European Central Bank’s blockchain push could redefine eurozone finance, offering faster, cheaper, and more transparent transactions. If successful, Pontes and Appia may set a global benchmark for central bank digital infrastructure.

As the ECB prepares for its 2026 pilot, all eyes will be on how DLT transforms Europe’s financial landscape—and whether other central banks follow suit.