ECB Puts Tokenized Central Bank Money at Center of Digital Finance Strategy

Piero Cipollone, a member of the European Central Bank's Executive Board, has been advocating for the use of central bank money in digital finance. In a speech titled 'From vision to delivery, building Europe's tokenised financial market,' he argued that digital finance needs a risk-free settlement asset, and only central bank money fits that description.

Cipollone emphasized that without tokenized central bank money, markets built on distributed ledger technology could fragment into competing private ecosystems, each carrying counterparty risk that traditional finance has spent decades learning to manage. He has been beating this drum since at least 2024 and his latest speech marks a shift from advocacy to implementation timelines.

The ECB's strategy centers around two initiatives: Pontes and Appia. Pontes aims to connect commercial DLT platforms with the Eurosystem's existing TARGET services, allowing transactions on distributed ledger platforms to settle in tokenized central bank money. The initiative is set to go live in September 2026. Appia takes a longer view, targeting the integration of Europe's tokenized financial markets by 2028.

The digital euro has also been proposed for pilot testing in 2027, with a potential first issuance in 2029, contingent on regulatory frameworks being adopted by late 2026. Cipollone frames this as a necessity, arguing that without tokenized central bank money, digital finance risks disrupting monetary policy transmission.