The ECB will invest in tokenised securities, and settle the trades on its own new rail

The European Central Bank is preparing to put some of its own money into tokenized securities, moving from building the plumbing for digital asset markets to buying in them.

Settlement will occur in central bank money, routed through Pontes, the system the Eurosystem has built for trades running on distributed ledger technology.

What the bank intends to buy is conventional enough in substance: euro-denominated debt issued by central and regional governments in the euro area, by their agencies, and by European supranational bodies. Only the wrapper is new.

The announcement commits the bank to a “small portion” of the portfolio without attaching a figure, and leaves the operational details and timing to the Executive Board until that groundwork is done.

That decision is to take account of how tokenized issuance actually develops, which is a way of saying the size of the program depends on how much there turns...

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