Piero Cipollone, a member of the Executive Board of the European Central Bank, said digitalisation and tokenisation could transform finance by making transactions faster, cheaper and more efficient through distributed ledger technology (DLT). Speaking in Rome, he argued that tokenised markets need tokenised central bank money at their core to ensure safe settlement, financial stability and effective monetary policy transmission.

Cipollone warned that without central bank-backed digital money, private settlement assets such as stablecoins could dominate tokenised markets, increasing risks to banking systems, financial stability and monetary sovereignty. He noted that widespread use of foreign currency stablecoins could weaken central banks’ control over interest rates and money supply.

The ECB plans to support the development of tokenised finance through projects such as Pontes, which will provide tokenised central bank money settlement services from September, and Appia, a roadmap aimed at creating interoperable standards for digital financial markets.

(ecb.europa.eu)