The European Central Bank (ECB) has begun full-scale efforts to establish a central bank money-based public payment infrastructure to drive explosive growth in the tokenized finance market, aiming to secure dominance in digital finance.

According to Cointelegraph on March 25 (local time), Piero Cipollone, a member of the ECB’s Executive Board, emphasized the need for tokenized central bank money during a speech in Brussels, Belgium. Cipollone stated that for Europe’s tokenized finance market to expand meaningfully, it must be supported by a central bank digital currency serving as public payment infrastructure. He analyzed that market confidence would increase significantly when safe assets issued by the central bank become the core means of settlement.

Currently, the tokenization market lacks a central bank digital currency-based payment method, forcing asset sellers to assume considerable risk in receiving payments. Cipollone noted, “Without a central bank money-based payment instrument, sellers of tokenized securities have no choice but to receive payments in assets exposed to price volatility or credit risk.” Such instability is a critical factor that deters institutional investors and hampers overall market expansion.

To address these issues, the ECB is advancing Pontes, a Eurosystem distributed ledger technology (DLT) settlement project. The core objective of Pontes is to connect market DLT platforms with existing TARGET payment services to support real-time settlement in central bank money. The ECB is pursuing a strategy that combines the innovation of private platforms with the stability of central bank assets.

The Pontes project is in its final development stage, targeting an official launch in the third quarter of this year. Once fully operational, tokenized securities trading within Europe, as well as various digital asset settlement systems, are expected to see significant improvements. Cipollone expressed confidence that as standards for the digital euro are established, Europe will be able to secure leadership in the global tokenized finance market.

The ECB’s move is expected to have a considerable impact on the global race among central banks to introduce digital currencies. The public payment infrastructure model presented by Pontes is likely to accelerate the integration of virtual assets into the regulatory framework and drive modernization of the financial system. Investors are closely monitoring the potential impact of Europe-led digital financial innovation on asset revaluation, while carefully tracking the detailed operational guidelines of Pontes ahead of its planned third-quarter launch.

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