#TARGET2

Project Pontes: why a trigger solution is still needed alongside wCBDC

Project Pontes, launching in September, introduces two distinct settlement mechanisms for DLT transactions within the Eurosystem. The framework offers a wholesale CBDC-like cash token and a trigger solution that connects DLT platforms to the existing TARGET2 (T2) payment system. While the cash tokens allow for intraday circulation between banks, they currently lack legal settlement finality because they function as proxies for central bank money rather than direct wCBDC. Settlement finality is only achieved when tokens are burned and funds are defunded back to the T2 account, a process currently automated only at the end of the business day. This limitation makes the trigger solution a more attractive option for institutions requiring immediate, irreversible settlement. The European Central Bank has indicated that a technical upgrade to address these finality issues for DLT-based cash tokens is expected by mid-2027. This development highlights the ongoing regulatory and technical challenges in bridging traditional central bank payment systems with emerging distributed ledger technologies.

Ledger Insights·2h ago