The European Central Bank is stepping up efforts to build an integrated tokenized financial market. Executive Board member Piero Cipollone has called for common standards, central bank money and coordinated regulation to prevent blockchain-based finance from becoming a collection of disconnected platforms.

In a speech at Deutsche Bundesbank’s symposium in Frankfurt, Cipollone said tokenization could fundamentally reorganize finance by representing assets as programmable digital tokens.

Rather than simply speeding up existing processes, distributed-ledger technology could combine functions such as trading, settlement, custody and asset servicing in shared environments. Atomic transactions and smart contracts could also automate settlement, collateral movements, coupon payments and compliance.

Tokenization could help overcome fragmentation

Europe has a particular incentive to pursue that model because its existing capital markets remain fragmented. The EU has 31 central securities depositories, 14 central counterparties and 323 trading venues, while more than 95% of securities transactions in 2023 were settled between parties within the same individual CSD.

Cipollone said tokenization could allow Europe to leapfrog those legacy divisions, but only if the new infrastructure is designed to work together.

The ECB is focused on three risks: fragmentation caused by incompatible networks, the loss of central bank money as a safe monetary anchor, and dependence on non-European infrastructure, technology and governance. Cipollone said central bank money provides protection against credit and liquidity risk and should remain at the center of the tokenized financial ecosystem.

Pontes brings central bank money onchain

The Eurosystem is pursuing that objective through Pontes and Appia. Pontes is designed to connect market DLT platforms to TARGET Services, allowing tokenized transactions to settle their cash leg in central bank money and supporting synchronized delivery-versus-payment.

The ECB plans to go live with Pontes this year, initially charging only one-off onboarding fees. It aims to extend the service to 22.5 hours per business day and eventually provide 24/7 settlement by mid-2028, alongside greater programmability, resilience and multi-currency functionality.

Appia focuses on the longer-term architecture. The project examines interoperability and standards, monetary policy implementation, collateral management, tokenized central bank money, cross-border transactions, legal and regulatory arrangements and resilience. Its goal is to produce a blueprint for an integrated European tokenized financial ecosystem by 2028.

Common standards needed to scale

Cipollone said technology alone will not create an integrated market. Europe needs interoperability that allows assets and transaction instructions to move across networks while preserving ownership, rights, history and legal finality. It also needs public-private coordination because tokenization will only scale if issuance, trading, custody, settlement, collateral and asset servicing develop together.

The expert called for legal harmonization covering the status of tokenized assets, ownership rights, settlement finality, custody, liability and smart-contract outcomes. Without compatible legal foundations, he said, technical interoperability would not be enough to overcome Europe’s fragmentation.

According to Cipollone, tokenized traditional assets on public blockchains grew roughly fivefold from March 2025 to March 2026, while tokenized repo activity on one US private platform reached an average of $354 billion a day in March. Europe, he said, still has the opportunity to influence the structure of the emerging market before those networks and standards become entrenched.

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