ECB Launches Pontes to Settle Tokenized Trades in Central-Bank Money
The European Central Bank (ECB) has launched its new Pontes platform, which enables banks to settle tokenized asset trades in central-bank money. This move locks out privately issued stablecoins or bank deposits from the digital payment system.
Pontes is an ECB project that connects distributed-ledger technology platforms run by market operators to the apex bank's TARGET Services. The platform uses a permissioned stack derived from XRP Ledger technology, but does not include the XRP token itself.
The ECB chose to use euro-denominated central-bank settlement over stablecoins due to its position that tokenized commercial-bank deposits and regulated stablecoins may take on a larger role in markets adopting DLT. However, central-bank money should remain the anchor for settlement, according to the Eurosystem.
Pontes offers a dual-settlement model, allowing participants to settle using digital tokens representing central-bank money or T2, the existing payment system. The trade is only final once it is recorded in T2, providing legal certainty similar to euro payments today.