European Central Bank Launches Platform for Settling Cryptocurrency Securities Transactions

The European Central Bank (ECB) and the national central banks of the euro area launched a new platform on Monday designed to enable financial institutions to settle transactions in tokenized securities directly using guaranteed central bank money.

In a statement, the ECB announced its intention to invest part of its funds in tokenized securities through the new “Points” platform to test the technology in practice.

Currently, the trading of securities relies on a chain of intermediaries. Every buyer of bonds or shares must go through a series of separate procedures, starting from the stock exchange, passing through clearing houses, and ending with custody at specialized banks.

Through tokenization, where assets are recorded as digital tokens based on modern “blockchain” technology, also known as distributed ledger technology (DLT), all procedures involved in trading bonds or shares can be integrated into a single automated process.

While decentralized database technology was previously known as the technological foundation for cryptocurrencies such as Bitcoin, it is now increasingly being used in money markets to save time, reduce costs, and lower banking risks.

At the same time, these modern platforms still lack a completely safe and stable payment mechanism. This is where the “Points” platform comes in; the word is Latin for “bridges,” and it serves as a link between the world of blockchain networks and traditional guaranteed central bank money.

For her part, ECB President Christine Lagarde stated that the European single currency system aims to make European financial markets more integrated, innovative, and resilient to crises in the digital age.