ECB Bridges Blockchain and Traditional Finance with Pontes System

The European Central Bank (ECB) has launched 'Pontes', a system that allows wholesale transactions in tokenised assets to settle in central bank money.

Pontes enables tokenised trades, such as stocks and bonds recorded on distributed ledgers, to be settled directly in reserves held at the ECB itself.

This development addresses one of the main barriers holding back blockchain technology: the absence of a risk-free settlement asset.

Larger institutions have been hesitant to participate due to the credit risk associated with settling tokenised trades in commercial bank money or stablecoins.