The European Central Bank has launched preparatory work to invest a small part of its own funds portfolio in tokenised securities. Transactions will be settled in central bank money through Pontes, the Eurosystem's solution for assets based on distributed ledger technology.
The European Central Bank (ECB) has initiated preparatory work to invest a small part of its own funds portfolio in tokenised securities, according to ecb.europa.eu. The aim is for the institution to gain practical experience as an investor and develop institutional knowledge about the use of distributed ledger technology (DLT) in financial markets.
The own funds portfolio is a portfolio separate from monetary policy that provides income to the ECB to help finance its operational expenses, excluding those related to its supervisory tasks.
Purchases will be settled in central bank money via Pontes, the Eurosystem's solution for settling tokenised assets, which was launched this Monday. This initiative is part of the Eurosystem's strategy to adapt central bank money to the digital age, alongside the Appia project, which will define a plan for a tokenised financial ecosystem in Europe.
By investing directly, the ECB will gain firsthand knowledge of the entire investment cycle, from executing transactions to settlement, including systems and portfolio management.
The initial investments will focus on euro-denominated securities issued by central and regional governments in the euro area, as well as European supranational agencies and institutions.
Once the preparatory work is completed, the ECB Executive Board will determine the operational details and timeline for the investments, taking into account the evolution of tokenised issuances and the tokenised financial ecosystem in Europe.
Tokenised financial markets continue to evolve, alongside the development of new DLT-based market infrastructures.
The ECB has not specified the volume of the investment or the exact dates for the initial purchases, which will depend on market developments.
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