Why Governments and Institutions Are Putting Sovereign Debt Onchain
On 21 September the European Central Bank did two things it had never done before. It switched on Pontes, a service that lets tokenised securities settle in central bank money, with a first group of banks and ledger operators already connected. It also announced that a portion of its own funds will be invested in tokenised bonds issued by euro-area governments, agencies and supranationals, settled through the new rails. Piero Cipollone of the ECB's executive board described it as bringing the stability and trust of central bank money to tokenised finance. That is a central bank saying, in its own name and with its own balance sheet, that government debt on a distributed ledger is an asset class it intends to hold.
The rest of the world got there earlier and by different routes. Hong Kong has sold three digital green bonds worth a combined HK$16.8 billion, the...
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