ECB Urges Central Bank Money for Growing Tokenized Markets in Europe

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ECB says tokenized markets need central bank money

The European Central Bank is again emphasizing the importance of digital central bank money, as Europe aims to expand its market for tokenized financial assets. According to ECB official Piero Cipollone, for tokenized deposits and stablecoins to thrive throughout Europe, they’ll need a reliable public system for final settlement using central bank money.

Summary

  • ECB says tokenized deposits and stablecoins need central bank money to scale in Europe.
  • Pontes will connect DLT platforms with TARGET Services for settlement in central bank money.
  • Cipollone said Europe still needs clearer tokenization laws and stronger public-private coordination efforts.

During a speech on March 23rd in Brussels, Cipollone explained that a digital form of central bank money is essential to reliably settle transactions involving tokenized securities, deposits, and stablecoins. He cautioned that without this, businesses could be stuck receiving payments in assets they don’t want due to fluctuating prices or concerns about the issuer’s financial health.

If central banks don’t offer digital money, sellers of digital securities might be paid with assets they don’t want, like those with unstable prices or risk of default. This could prevent the market from growing significantly.

His comments highlight that public funds will be a key part of the ECB’s plan to explore digital tokens. This plan is being developed through Pontes, a Eurosystem project designed to improve how financial transactions are settled using new technologies. Pontes aims to link existing digital platforms with the Eurosystem’s established payment systems, ensuring transactions are finalized using central bank money.

Pontes launch set for third quarter of 2026

The ECB announced that Pontes, a new system, is scheduled to launch initially in the third quarter of 2026. This first step will address current market needs and allow users to finalize transactions using central bank funds on a digital ledger technology platform.

Pontes is one piece of a larger, two-part strategy. One part quickly delivers useful tools for settlements, while the other, called Appia, aims to build a comprehensive tokenized financial system across Europe by 2028.

The ECB announced that Appia is being developed with feedback from the financial industry. Its goal is to explore the growth of digital finance in Europe, ensuring the continued reliability and security of central bank money for transactions.

Cipollone calls for legal clarity across the bloc

Cipollone also stated that simply reaching a settlement won’t resolve the issues. He emphasized the need for better collaboration between government organizations and private companies, and for clear legal guidelines for digital asset finance throughout the European Union.

Appia includes a focus on interoperability, aiming to allow tokenized assets to move easily between different blockchain platforms. This is achieved by using common data formats and ensuring smart contracts work together seamlessly.

As an analyst, I view the European Commission’s move to expand and refine the DLT Pilot Regime as a positive step. However, I also believe Europe may eventually require a specific, comprehensive legal framework to truly streamline the issuance, custody, and transfer of tokenized assets throughout the region.

Several private companies have also weighed in on the discussion. For example, Circle submitted comments on March 20th suggesting that the Commission expand the Digital Ledger Technology (DLT) Pilot Regime to let approved crypto companies offer services related to e-money tokens and cash accounts.

This feedback arrived shortly before Cipollone’s speech, and combined with his remarks, it demonstrates a growing desire from both government organizations and private companies for more defined regulations as Europe develops large-scale tokenized markets.

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2026-03-24 13:16