Tokenised settlement, the execution of financial transactions using digital tokens on distributed ledger infrastructure, has been the subject of central bank experiments for several years. What distinguishes the current moment is that experiments are transitioning to operational infrastructure at systemically important institutions. The ECB's planned experiment linking trading platforms and TARGET services in Q3 2026 is the most significant signal yet that tokenised settlement is moving from proof-of-concept to production.
The ECB experiment and what it tests
The ECB experiment involves connecting private distributed ledger platforms used by market participants with the TARGET settlement infrastructure: specifically exploring how central bank money can be used to settle tokenised transactions on private chains. The key technical challenge being tested is interoperability: how a token representing a financial asset on a private chain can be settled against central bank money without requiring both legs of the transaction to be on the same infrastructure.
The solutions under examination include Delivery versus Payment mechanisms on DLT, hash time-locked contracts, and dedicated interoperability bridges between private chains and the TARGET infrastructure. The outcome of this experiment will significantly influence whether the ECB proceeds with a wholesale digital euro specifically designed for DLT-based settlement.
mBridge and cross-border implications
SAMA and CBUAE are founding participants in the BIS mBridge project, which completed live cross-border transactions between the UAE and China in late 2025. The mBridge platform uses a purpose-built multi-CBDC DLT to enable direct central bank money transfers between participating countries, bypassing the correspondent banking chain that currently handles cross-border settlements.
For payment companies with significant cross-border and remittance volumes in GCC corridors, the medium-term implications are material. If the mBridge infrastructure scales and connects to additional jurisdictions, it creates a direct settlement alternative to correspondent banking for institutional flows. The commercial impact on remittance corridors, and on the financial institutions that currently profit from FX spread and correspondent banking fees in those corridors, is significant.
Commercial implications for payment service providers
Payment service providers need to assess tokenised settlement along two dimensions. First, what do they need to do technically to connect to emerging tokenised infrastructure if their clients, banks, asset managers, large merchants, begin to settle transactions through DLT-based systems? Second, how does the evolution of wholesale settlement infrastructure affect the correspondent banking relationships and FX conversion services that underpin their cross-border products?
The honest answer for most payment companies is that operational impact in the next 12–24 months is limited, but the trajectory is clear. Building the technical literacy and commercial understanding to participate in tokenised settlement conversations with institutional clients is now a reasonable near-term investment.