The Nearly Two-Year Gap of ECB After the Successful 1.6 Billion Euro Test Could Promote Stablecoin and Alternative Solutions.
The European Central Bank (ECB) has just announced that the temporary payment solution Pontes for Distributed Ledger Technology (DLT)-based transactions will only be piloted from the third quarter of 2026. This information disappoints many industry organizations by creating a prolonged gap of nearly two years after last year's successful test phase.
In February, ECB announced plans to deploy two approaches in the Eurosystem to enable DLT transaction payments using central bank money for wholesale applications. Pontes - meaning "bridges" in Latin - is positioned as a short-term solution before the long-term Appia option is completed.
Last year, ECB successfully conducted a test phase with 64 financial institutions, applying three different solutions and processing a total payment value of up to 1.6 billion euros. Some parties had hoped the pilot program would be extended to maintain deployment momentum, but the current roadmap shows a waiting period longer than expected.
The short-term solution will likely integrate Germany's Trigger and may include Italy's Hashlink, though specific details will only be confirmed when ECB issues an official announcement. In the long term, Appia - meaning "the road" in Latin - is expected to integrate a wholesale central bank digital currency with higher experimental characteristics.
Alternative Options During the Waiting Period
This time gap raises questions about alternative on-chain payment options. In a context where the United States is strongly promoting tokenization initiatives, European financial institutions may seek temporary solutions to avoid falling behind.
Although many central banks, especially ECB, are not enthusiastic about stablecoins, the lack of central bank money payment solutions could inadvertently promote stablecoin usage. Organizations still prioritize money issued by central banks, but time pressure might force them to consider other options.
Encoded deposits are a potential solution, though the number of such models in Europe remains very limited. Tokenization systems for individual bank deposits are also unsuitable for inter-bank payment requirements. The question is whether multi-bank solutions like Germany's Commercial Bank Money Token could be deployed faster than the Eurosystem's roadmap.
Integrating existing wholesale multi-bank systems like Fnality or Partior is also being considered. However, the likelihood of quick approval is very low. Even if approved, the integration effort must be weighed against the proximity of ECB's official solution.
Appia is expected to include international payment elements and potentially integrate with the plan to build a unified European Ledger to align with the European Savings and Investment Union plans. Meanwhile, the report on last year's wholesale DLT payment test program is expected to be published soon.
The simplest current solution might be leveraging existing systems while waiting for central bank-deployed options, although this could slow digital transformation in the European financial sector.
