Rethinking Payments – Wholesale Settlement Solutions as an Anchor

Contents

1 Wholesale settlement solutions based on distributed ledger technology
2 ECB activities: The ECB’s dual strategy with Pontes and Appia
3 Position of the Association of German Banks on the future design of wholesale settlement solution in the Eurosystem
4 A distribution solution would benefit from market consolidation and a clear regulatory framework
5 Conclusion

The area of wholesale settlement in the interbank market is currently undergoing a phase of dynamic development, in which the use of distributed ledger technology (DLT) is opening up new opportunities for efficiency, speed, and risk reduction. The DLT-based approaches currently under discussion for the settlement of payments and securities transactions in central bank money have the potential to sustainably strengthen the European capital market and significantly enhance Europe’s position in global competition.

Three possible architectural models are available for implementation: interoperability, integration, and distribution solutions, which differ in how central bank money and digital assets are technically linked. Building on extensive testing conducted in 2024, the Eurosystem is pursuing Pontes as a short-term interoperability solution and Appia as the long-term development of a token-based wholesale CBDC.
The objective is to enable innovation while ensuring stability, control, and legal certainty.

From the perspective of the Association of German Banks, the current design of Pontes entails unnecessary complexity and weakens investment incentives. In the long term, only the distribution solution is convincing, as it makes central bank money directly available on market-facing DLT platforms and combines efficiency, innovative capacity, and regulatory oversight. A prerequisite for the success of the distribution solution is the establishment of clear and harmonised regulatory frameworks across the euro area.