Madouros calls for tokenisation safeguards and resilient non-banks
Central Bank of Ireland Deputy Governor Vasileios Madouros called for stronger foundations for tokenised finance and non-bank resilience. At the European Capital Markets Institute's annual conference, he linked both to European market integration.
Four foundations for tokenised finance
Tokenisation is moving into live applications but remains small in scale, Madouros said.
Benefits include faster settlement, lower counterparty exposure, new services and less European market fragmentation.
These require coordinated legal, regulatory, operational and monetary arrangements.
He set four priorities: central bank money settlement, supported by Eurosystem projects Pontes and Appia; clear, agile rules with equivalent regulatory outcomes for equivalent activities and risks; private-sector leadership on interoperable tokenised deposits across Europe; and sovereign and supranational tokenised bonds settling on Pontes.
Public issuance would supply high-quality collateral and encourage private issuance.
He warned against premature regulatory prescription.
Markets must withstand shocks
Madouros said non-banks' systemic footprint would grow as Europe expands capital market financing.
Diversification offers macro-financial benefits, but intermediation must withstand shocks.
His three priorities were surveillance of core-market resilience; implementation of agreed reforms, including Financial Stability Board recommendations on open-ended funds and non-bank leverage; and stronger crisis tools.
These include powers for failures of non-bank payment providers and examining trade-offs in supplying liquidity to non-banks.
Engagement before prescription
The Central Bank will launch focused, time-bound industry sprints on tokenised finance, following its feedback statement.
A Tokenisation Access Point will offer a clearer route for questions about existing rules and frameworks.
Madouros said both mechanisms would help anticipate policy questions and enable flexible responses.