Central bank digital currency essential for European stablecoin and tokenized deposit growth, ECB official declares
In a recent statement, Piero Cipollone from the ECB's Executive Board emphasized that Europe's tokenized financial markets require central bank money infrastructure, highlighting Pontes and comprehensive legal updates as critical priorities.
Europe's tokenized financial markets will require tokenized central bank money to serve as a public settlement foundation if stablecoins and tokenized deposits are to achieve meaningful scale, according to Piero Cipollone, who serves on the European Central Bank's Executive Board, during remarks delivered on Monday.
In his address, Cipollone highlighted Pontes, the distributed ledger technology (DLT) settlement program being developed by the Eurosystem, which aims to bridge market-based DLT platforms with the Eurosystem's TARGET Services infrastructure and enable settlement using central bank money.
Without tokenised central bank money, a seller of a tokenised security may receive payment in an asset they are not comfortable holding – one exposed to price volatility or credit risk – which limits the market's ability to scale.
Piero Cipollone, ECB Executive Board member, speaking at the House of the Euro in Brussels
According to the ECB, Pontes is scheduled for its preliminary rollout during the third quarter of 2026, which will enable market participants to complete DLT-based transactions with settlement in central bank money. These statements expand upon the ECB's wider Appia initiative, which was released on March 11, and seeks to develop a comprehensive blueprint for Europe's future tokenized financial ecosystem, with a target completion date of 2028.
Europe's tokenized markets need legal clarity
In addition to the requirement for settlement in central bank money, Cipollone emphasized that Europe requires strengthened collaboration between public and private sectors, along with a legal infrastructure that aligns with technological capabilities.
Among Appia's foundational components is an interoperability standard designed for digital assets, which guarantees that tokenized assets can be moved between various DLT platforms through the use of a standardized data format and uniform smart contract protocols.
Cipollone encouraged operators of market infrastructure, banking institutions, custodial service providers and technology companies to examine and provide input regarding the Appia roadmap, with the goal of cultivating enhanced public-private collaborative partnerships.
Cipollone further indicated that Europe may eventually require a specialized legal framework designed to facilitate the frictionless creation and movement of tokenized assets throughout the entire region.
He characterized the European Commission's proposal to expand the DLT Pilot Regime as an "important development," while warning that the lack of a comprehensive tokenization framework creates the danger of "building advanced settlement infrastructure on a patchwork of regulations, leaving us unable to fully reap the benefits."
These statements arrive just days following stablecoin provider Circle's submission of feedback to the European Commission's Market Integration Package on March 20, where the company pressed lawmakers to broaden the current DLT Pilot Regime and offer e-money token (EMT) cash account services to authorized crypto-asset service providers.