Tokenised settlement, completing financial transactions with digital tokens on distributed ledgers, has been tested by central banks for years. What is changing is that some of this work is now moving towards live infrastructure. In Europe, the ECB plans a pilot, known as Pontes, to let DLT platforms settle in central bank money through its TARGET services, alongside a longer-term project called Appia.

What the ECB work tests

The central question is interoperability: how a token representing an asset on a private ledger can be settled against central bank money without both sides of the trade sitting on the same system. Options include delivery-versus-payment mechanisms that link a DLT platform to TARGET, and bridges between ledgers and existing settlement infrastructure. The results will shape how far the ECB goes in supporting DLT-based settlement in central bank money.

mBridge and the GCC

The Central Bank of the UAE is a founding member of mBridge, a multi-CBDC platform for cross-border settlement run by the central banks of China, Hong Kong, Thailand and the UAE since the BIS withdrew in October 2024. The CBUAE made its first cross-border digital dirham payment to China over the platform in January 2024. Saudi Arabia joined in 2024 but has since confirmed it is no longer a participating member.

For payment firms with large GCC–Asia volumes, the longer-term question is whether platforms like mBridge grow into a real alternative to correspondent banking for institutional flows. If they do, it would affect the FX spreads and correspondent fees that many cross-border businesses currently earn.

What this means for payment service providers

PSPs should look at two things. First, what they would need to do technically if their clients, such as banks, asset managers or large merchants, start settling through DLT-based systems. Second, how changes in wholesale settlement could affect the correspondent banking and FX services behind their cross-border products.

For most payment companies the operational impact over the next 12 to 24 months will be small, but the direction is clear. Building enough technical and commercial understanding to discuss tokenised settlement credibly with institutional clients is a sensible investment now.