The European Central Bank (ECB) is expanding its ambitions far beyond a digital euro. In a recent speech, Executive Board Member Piero Cipollone said tokenization presents a “rare opportunity” to build a unified European market for digital assets, essentially a capital markets union in digital form.
NEW: EUROPEAN CENTRAL BANK EXECUTIVE BOARD MEMBER PIERO CIPOLLONE SAYS “TOKENISATION CREATES A RARE OPPORTUNITY TO DESIGN A EUROPEAN MARKET FOR DIGITAL ASSETS THAT IS INTEGRATED FROM THE OUTSET, IN OTHER WORDS, A DIGITAL CAPITAL MARKETS UNION”
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Why the ECB Wants a European Digital Asset Market
According to Cipollone, Europe continues to lag behind global capital markets. Post-trade infrastructures remain fragmented by country, and settlement and custody costs are significantly higher than in North America.
In this context, tokenization is not just a technological shift, but a political and strategic one. The ECB wants Europe to establish a fully integrated market for tokenized assets from the start, built with European standards and infrastructure rather than depending on systems developed abroad.
The central bank has also warned that stablecoins could destabilize the financial system, strengthening the case for EU-controlled settlement mechanisms.
Tokenization and Central Bank Money: The ECB’s Vision
The ECB argues that tokenization can merge issuance, trading, settlement, and custody into a single digital environment. This creates faster, more programmable markets with fewer intermediaries.
But Cipollone highlighted a major risk: if tokenized markets rely on private stablecoins or fragmented settlement tokens, liquidity will splinter, forcing institutions to juggle multiple tokens, standards, and platforms. Stress events could challenge convertibility promises.
The ECB’s solution is clear: use tokenized central bank money, anchored to the euro and compatible with next-generation financial infrastructure.
Pontes and Appia: The Eurosystem’s Two Flagship Projects
To bring this vision to life, the ECB is advancing two major initiatives:
Pontes (Launching Q3 2026)
Pontes will connect market DLT platforms with existing TARGET services, enabling settlement of tokenized asset transactions in central bank money. It builds on current infrastructure to maintain low costs and preserve European security and resilience standards.
Appia (Exploring a Unified Digital Asset Ecosystem)
Appia goes much further, studying the creation of a comprehensive European digital asset ecosystem. Two models are being examined:
A single shared ledger uniting central bank money, commercial bank deposits, and tokenized financial assets on one platform.
A network of interoperable platforms connected through common EU standards.
In both scenarios, the ECB would act as the settlement anchor, while private companies build services and business models on top.
Impact on Crypto, Stablecoins, and Investors
For the broader cryptocurrencies market, the ECB’s message is cautious but not hostile. Cipollone emphasized that private initiatives are welcome, but Europe must not become dependent on USD-based stablecoins for large-value settlement, repeating a dependence similar to that seen in retail payments dominated by non-European providers.
For investors and institutions, the strategy could unlock a wave of euro-denominated digital instruments, including tokenized bonds, fund shares, commercial debt, and tokenized deposits, and all settled directly in central bank money.
This could accelerate the creation of a true digital capital markets union, boosting liquidity, depth, and cross-border efficiency.
The biggest unanswered question:
Will private actors align with a European settlement framework—or continue building on global stablecoins and foreign platforms?
