ECB says tokenized markets need central bank money

The European Central Bank has renewed its push for tokenized central bank money as Europe works to build a larger tokenized financial market. ECB Executive Board member Piero Cipollone said tokenized deposits and stablecoins will need a public settlement base in central bank money if the market is to grow across the region.

Cipollone made the case during a speech in Brussels on March 23. He said tokenized central bank money is needed as a settlement anchor for tokenized securities, deposits and stablecoins. He warned that without it, market participants may receive payment in assets they do not want to hold because of price swings or credit concerns. He said, 

His remarks place public money at the center of the ECB’s tokenization plan. The ECB has been building that plan through Pontes, the Eurosystem’s distributed ledger settlement project. Pontes is designed to connect DLT-based market platforms with the Eurosystem’s TARGET Services so transactions can settle in central bank money.

The ECB said Pontes is due for an initial launch in the third quarter of 2026. That first phase is meant to meet immediate market demand and let participants settle DLT-based transactions in central bank money.

Pontes is part of a broader two-track plan. The shorter-term track focuses on practical settlement tools, while the longer-term track is Appia, which is meant to help shape a wider European tokenized financial system by 2028.

The ECB said Appia will be built with market input. It is meant to map out how tokenized finance can develop in Europe while keeping central bank money as the base layer for trust and settlement.

Cipollone calls for legal clarity across the bloc

Cipollone also said settlement alone will not be enough. He called for closer work between public institutions and private firms, along with legal rules that fit tokenized finance across the European Union.

One part of Appia focuses on interoperability. The goal is to make tokenized assets transferable across different DLT platforms through shared data formats and compatible smart contract standards.

He said the European Commission’s plan to extend and improve the DLT Pilot Regime is “important and welcome.” At the same time, he warned that Europe may still need a dedicated legal framework so tokenized assets can be issued, held and transferred more smoothly across the bloc.

In addition, the debate has also drawn comments from private sector firms. Circle said in feedback submitted on March 20 that the Commission should widen the DLT Pilot Regime and allow authorized crypto-asset service providers to offer e-money token cash account services.

That feedback came just days before Cipollone’s speech. Together, the comments show that both public institutions and private firms are pushing for clearer rules as Europe tries to build tokenized markets that can work at scale.