Cipollone: Eurosystem lays groundwork for tokenised financial markets
Piero Cipollone, Member of the ECB Executive Board, outlined the Eurosystem's strategy to overcome fragmentation and enable scalable tokenised financial markets in Europe. He emphasized the need for a safe settlement anchor and a robust legal framework.
Bridging fragmentation with central bank money
Tokenised capital markets in Europe have moved from exploration to production, with €4 billion in DLT fixed-income instruments issued since 2021.
However, two main obstacles prevent scale: platform fragmentation and the absence of a common, trusted on-chain settlement asset.
Piero Cipollone, Member of the ECB Executive Board, highlighted that multiple DLT networks operate without synchronisation, fragmenting liquidity and increasing integration costs.
Without tokenised central bank money, sellers of tokenised securities may receive payment in assets exposed to volatility or credit risk, limiting market scalability.
The Eurosystem's 2024 exploratory work, involving €1.6 billion in transactions across nine jurisdictions, revealed clear market demand for central bank money settlement, which is the safest and most liquid asset, free from credit or liquidity risk.
This anchor is crucial for the new technology as tokenised markets grow, ensuring private innovation can scale with confidence.
Pontes and Appia: A two-way street
The Eurosystem's DLT integration strategy centers on Pontes and Appia.
Pontes, launching in Q3 2026, will bridge market DLT platforms with TARGET Services, enabling central bank money settlement.
Appia, a longer-term vision, aims for a blueprint by 2028, addressing technical standards, interoperability, and cross-border connectivity.
Cipollone emphasized these form a single strategy, with Appia's vision shaping Pontes and operational lessons influencing Appia.
This public-private partnership is vital; the 2024 exploratory work, involving 64 participants, directly informed Pontes' design.
The Eurosystem's acceptance of DLT-based assets as eligible collateral, starting March 2026, further supports market scaling.
Legal ambition must match tech
Legal fragmentation significantly hinders Europe's capital market integration, a challenge technology alone cannot solve.
A dedicated EU legal framework is crucial for seamless cross-EU tokenised asset transfers, avoiding a regulatory patchwork that limits benefits.
Europe must align legal ambition with technological progress now, securing lasting leadership in digital finance.