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ECB lays out next steps for Europe’s tokenised financial market
The ECB said cross border settlement remains limited, with more than 95% of 2023 securities transactions settled within the same individual CSD by volume and value.
The European Central Bank used a recent Symposium address to describe how Europe can move from a tokenisation vision for financial markets to implementation. ECB executive Piero Cipollone said tokenised assets, using distributed ledger technology, could improve efficiency by representing and transferring assets as programmable data files, enabling around the clock trading with greater automation and fewer intermediaries.
Cipollone warned that the shift to tokenisation also creates a risk of fragmentation if incompatible platforms proliferate. He framed the ECB’s approach around building an integrated and dynamic ecosystem for digital assets, with central bank money at its core.
The ECB cited the current structure of Europe’s market infrastructure to highlight why change is needed. It pointed to 31 central securities depositories, 14 central counterparties, and 323 trading venues, while noting that cross border settlement is still limited and securities are largely held and settled within local CSDs.
Cipollone also said progress toward integration has been uneven, and that in 2023 more than 95% of transactions by both volume and value were settled between parties in the same individual CSD. The ECB said its Pontes and Appia projects are central to the next stage of turning the tokenisation plan into reality.