In a recent keynote speech in Washington, DC, Piero Cipollonemember The European Central Bank (ECB) The Board argued that tokenization and distributed ledger technology (DLT) represent a rare opportunity to break a century-old model in finance. Despite waves of technological advances, from electronic messaging to dematerialization securities– The real cost of connecting borrowers and savers has remained virtually unchanged.
In the United States and large European economies such as Germany, France and in the United Kingdom, the unit cost of financial intermediation has remained roughly constant at around 2 percent of intermediary assets.
Cipollone cautioned that past innovations enabled the existing layered trading, clearing, custody and payment system to run faster without changing its underlying architecture.
He explained that tokenization belongs to a different category: general purpose technology It has the capacity to restructure finances from scratch.
The entire lifecycle of an asset by converting assets into digital tokens recorded on DLT networks security—issuance, trading, clearing, and custody—can occur in a single, always-available digital environment.
Smart contracts can automate coupon payments and other processes, while a shared source of truth eliminates repeated reconciliations.
The result, in theory, is less friction, easier access and real cost savings passed on to end users.
But Cipollone emphasized that such gains are far from automatic. Like electricity in the early twentieth century, tokenization requires simultaneous adoption across all complementary parts of the market.
For example, a liquid government bond market relies on secondary trading, repo facilities, derivatives and hard resources. legal frameworks working in harmony.
Without coordinated action, individual players face high upfront costs and uncertain returns, discouraging change.
Some intermediaries are even taking advantage of the friction that new technology aims to eliminate.
To unlock broad benefits, Cipollone called for an integrated and competitive tokenized ecosystem.
Common standards and non-discriminatory access are necessary to prevent fragmented liquidity or “walled gardens” that create barriers for new entrants.
Design choices made now—whether it be a single shared ledger or multiple interoperable networks—will determine who reaps the gains.
The ECB currently serves as both anchor and catalyst.
Since late March 2026, marketable assets issued in DLT have been eligible as collateral. Eurosystem credit transactions.
Starting in September, the Pontes project will offer tokenized central bank money for payment DLT Transactions based on 2024 trials involving roughly €1.6 billion in nine regions.
This risk-free settlement asset is seen as critical to reaching the critical mass that makes tokenized markets scalable and attractive while preserving Europe’s monetary sovereignty.
Complementing this operational progress ECB Appia published its roadmap in March 2026.
Initiative reveals 2028 plan for Europe tokenized Financial ecosystem encompassing technical standards, interoperability, monetary policy implementation and legal foundations.
It will evaluate the optimal network architecture and ensure governance supports competition and integration.
Onion concluded that the ultimate success of tokenization is an institutional problem. Today, with the right policy choices, Europe We can build a financial system that will actually narrow the gap between savers and borrowers.
