In his keynote, Piero Cipollone discusses how technology—especially tokenisation and distributed ledger technology (DLT)—could transform the financial system and improve its efficiency.

Historically, financial innovations (like electronic trading) made systems faster but didn’t fundamentally change their structure. As a result, the overall cost of connecting borrowers and savers has remained largely unchanged over time.

Tokenisation, however, is different. It is a “general-purpose technology” that can reshape the entire financial system by integrating processes such as issuance, trading, settlement, and custody into a single digital environment. This could reduce costs, simplify access to finance, and automate processes through smart contracts.

But these benefits are not guaranteed. For tokenisation to deliver real efficiency gains, the whole financial ecosystem must adopt it together. This creates a coordination problem, as no single actor has strong incentives to move first. Additionally, existing intermediaries may resist change due to current profit structures.

The future structure of tokenised finance is also uncertain. It could involve one shared network or multiple interconnected ones, each with trade-offs. To avoid fragmentation and ensure competition, common standards and open access will be essential.

Central banks—particularly the European Central Bank—have a key role in this transition. They can:

• Provide tokenised central bank money as a risk-free settlement asset
• Accept tokenised assets as collateral
• Act as catalysts by promoting standards and coordination across the system

Initiatives like the Pontes project and the Appia roadmap aim to support the development of a unified and efficient tokenised financial ecosystem in Europe.

Conclusion:
Tokenisation has the potential to significantly reduce the cost of finance and improve efficiency—but only if supported by the right institutional decisions, coordination, and central bank involvement.

(ecb.europa.eu)