Pontes: why an obscure private chain instead of just Ethereum?

The question

On 21 September 2026 the European Central Bank (ECB) launched Pontes, a service that lets banks settle tokenised-asset trades in central bank money. Christine Lagarde summed it up as "it's a digital euro made available for banks".

The obvious objection: Ethereum already exists, is open, and hosts most tokenised assets. Why did the Eurosystem spend years building a private ledger instead of deploying a euro token there?

The short answer: the choice is about control and law far more than about technology. The technical arguments against Ethereum are weaker than the ECB's documents suggest, and the ledger is the least convincing part of the Pontes design.

What Pontes actually is

The official documents describe three modules: an interface to T2 (the Eurosystem's real-time gross settlement system), a Eurosystem ledger, and an API gateway.

• The ledger. The ECB's February 2026 technical session describes a "Permissioned DLT-based platform with Central Bank nodes". Each national central bank owns one node, all hosted by four service providers: the Bundesbank, the Banco de España, the Banque de France and the Banca d'Italia.
• The tokens. Cash tokens are intraday only. They are backed by funds escrowed in T2 and swept back every evening.
• The gateway. Banks never touch the chain. According to the Business Description Document, "The API Gateway component acts as a trusted oracle" for the settlement protocol.
• The protocol. Delivery versus payment uses Hash-Link, which the Banca d'Italia paper that introduced it calls "a lightweight, API based and DLT agnostic protocol".

The software stack is not named in any official document found. The 2024 trial systems ran on Hyperledger Fabric, so Fabric is the likely answer, but that is an inference.

Performance targets are modest: 10 transactions per second, 95% of cash legs within 5 seconds, open 09:00 to 16:00 CET on business days. Legal finality still happens in T2, not on the ledger.

The official case for a private ledger

Control and sovereignty

This is the stated reason, and the strongest one. The User Requirements Document requires a consensus mechanism "fully under control of the Eurosystem", with all data inside the European Economic Area and all nodes hosted by the operator. It lists strategic autonomy on European infrastructure among its objectives.

Ethereum cannot meet that requirement by construction. Its validators are anonymous and global, fees are paid in ether, and protocol upgrades are decided by a community the ECB does not sit in. In a contested fork, the issuer of a euro token would have to pick the surviving chain.

Settlement finality

International standards say market infrastructures should settle "in central bank money where practical and available", and require clear, final settlement. Piero Cipollone of the ECB's Executive Board puts the premise plainly: "Central bank money is the safest and most liquid settlement asset."

Ethereum's finality is of a different kind. Its consensus protocol "combines Casper FFG, a finality tool, with LMD GHOST", and a block becomes final only after about two epochs, roughly 13 minutes. That finality is economic, not legal. EU settlement-finality law protects designated systems, and a proposal now before the European Parliament to replace the 1998 directive deals explicitly with "finality in systems that use DLT". Until such rules cover a public chain, a transfer there has no equivalent legal protection.

Access to central bank money

Reserves may only be held by eligible institutions. A freely transferable token would be a retail digital euro by the back door, and issuing one requires the regulation proposed by the European Commission in 2023, which has not yet been adopted. A token restricted by allowlist is technically possible on Ethereum, but then the "open" chain adds little.

Prudential and compliance risk

Bank supervisors are wary. A Basel Committee working paper on permissionless ledgers finds that practices for mitigating their risks "have not been tested under stress". Those risks include reliance on unknown third parties, which makes due diligence hard.

What the academic literature adds

• Governance of the ledger. Auer, Monnet and Shin model who should update a monetary ledger and find that, when long-term incentives are strong, "a centralized ledger is always optimal". Decentralisation wins only in low-trust settings. Central banks are the textbook high-trust case. The paper is also available as BIS Working Paper 924.
• Censorship. After OFAC sanctioned an Ethereum application in 2022, Wahrstätter et al. measured compliance-driven censorship by block producers and proved "a fundamental limitation of PoS and Proof-of-Work (PoW) protocols against censorship resilience". For the ECB this cuts both ways: foreign sanctions law could reach transactions in its own currency.
• Transaction ordering. Daian et al., "Flash Boys 2.0" documented how block producers profit from reordering transactions, now known as maximal extractable value. Pontes instead mandates strict first-in, first-out processing.
• The ledger may not matter. The BIS Annual Economic Report 2025 envisions a unified ledger for tokenised money and assets "which may or may not use distributed ledger technology". That undermines the case for any blockchain here, public or private.

The case for Ethereum

A Eurosystem central bank already did it

In April 2021 the European Investment Bank issued a €100 million bond, settled with a Banque de France representation of central bank money. The EIB press release states: "The transaction will use Ethereum, a public blockchain protocol." So the approach is feasible and was tested inside the Eurosystem. It was not carried into production.

The private chain adds little that a database would not

All nodes sit with four service providers. Participants connect through an API. A trusted oracle holds the secrets that make settlement atomic. The ECB's own exploratory work report describes one predecessor as infrastructure that "acts as technical bridge between the T2 and market DLT platforms". A bridge needs an interface, not necessarily a ledger of its own. Given the BIS and Auer-Monnet-Shin points above, a conventional database behind the same API would arguably serve as well.

The asset side can still be public

Hash-Link only requires that a market platform can lock an asset against a secret. Nothing in the protocol prevents that platform from being a public chain, provided its operator is a regulated entity, for instance one authorised under the DLT Pilot Regime. Pontes therefore keeps the euro leg private without forcing the assets off Ethereum.

Throughput and hours

Ethereum mainnet handles roughly 100 to 240 simple transfers per second at its current gas limit, runs around the clock, and its Glamsterdam upgrade targets a much higher limit. Pontes at launch offers 10 per second, seven hours a day. This matters less than it seems: wholesale settlement is low-volume and high-value.

Privacy: is zero-knowledge ready?

Banks will not publish their interbank flows. The Enterprise Ethereum Alliance's 2026 privacy report agrees: "Privacy and confidentiality are not features, they are prerequisites for enterprise adoption."

Zero-knowledge proofs can in principle deliver this on a public chain. The Privacy Pools paper by Buterin and co-authors shows how users can prove funds are clean "without publicly revealing their entire transaction graph". Other approaches use homomorphic encryption (see the draft ERC-7984 confidential token standard) or trusted execution environments.

Maturity is the problem:

Of the seven enterprise solutions the EEA reviewed, only two cleared its bar for production. A central bank writing requirements in 2025 could not reasonably build base money on that. A central bank writing them in 2028 might. The Bundesbank is already reported to be testing Prividium, according to coverage listed on ZKsync's site.

What did it cost?

No official figure has been published. The following is an estimate, not a sourced number.

For scale, the retail digital euro is reported to carry a €1.3 billion development budget. Income so far is negligible: the Pontes Pricing Guide sets only "one-off connection fees" of €2,500 per market participant, and thirteen institutions had onboarded at launch.

A mainnet token would not have been free either. Deploying a contract is cheap. The link to T2, the legal framework, key custody, security and onboarding are where the money goes, and all of them would still be needed.

Verdict

The ECB did not choose a private chain because Ethereum is technically inadequate. It chose one because it will not let base money depend on infrastructure it does not govern, and because the law gives it no finality there. Those are defensible positions.

What is harder to defend is the ledger itself. With every node hosted by the operator and every participant behind an API, the "distributed" in Pontes's distributed ledger does very little. The fairer comparison is between Ethereum and a well-run database behind a good API, and what the ECB built sits much closer to the database.

Further reading

• ECB press release of July 2025 announcing the Pontes and Appia two-track strategy
• PDF version of the exploratory work report, with details on the three trial solutions
• Banque de France service description of DL3S, the cash-token platform Pontes descends from
• BCBS Working Paper 44, full text
• BIS press release on the unified ledger
• Ethereum Foundation Institutional Privacy Task Force map and its essay on public rails versus private ledgers
• ERC-5564 stealth addresses and EIP-8105 encrypted mempools
• Blockchain Privacy and Regulatory Compliance, journal version