The European Central Bank (ECB) is moving ahead with plans to build an integrated European market for tokenised assets, Executive Board member Piero Cipollone said on Wednesday, warning that fragmented digital platforms could deepen divisions in Europe’s capital markets.

Speaking at the Deutsche Bundesbank’s Symposium on “Future of payments: trends and innovations in Germany and Europe” in Frankfurt, Cipollone said the ECB had moved from setting out a vision two years ago to putting it into practice through its Pontes and Appia projects.

“Today, I will discuss the next steps in turning that vision into reality,” Cipollone said.

He said tokenisation and distributed ledger technology (DLT) could make financial markets more efficient by allowing assets to be represented and transferred as programmable digital files, potentially enabling finance to operate around the clock with greater automation and fewer intermediaries.

At the same time, he warned that incompatible platforms could create a new form of fragmentation.

“This transformation also poses a risk: a proliferation of incompatible platforms could reproduce, or even deepen, the current fragmentation of Europe’s capital markets,” Cipollone said.

Europe currently has 31 central securities depositories, 14 central counterparties and 323 trading venues, while cross-border settlement remains limited.

More than 95 per cent of securities transactions, measured both by volume and value, were settled between parties within the same individual central securities depository in 2023, according to Cipollone.

Tokenisation could bring issuance, trading, clearing, settlement, custody and asset servicing into a shared digital environment, allowing transactions to be executed conditionally and atomically so that the cash and asset legs settle together or not at all.

Smart contracts could also automate processes including coupon payments, collateral movements and compliance checks.

“Tokenisation is therefore not merely an incremental improvement to one stage of a financial transaction,” Cipollone said, arguing that it could instead reshape the entire financial value chain.

He said the global market was already moving from experimentation towards early adoption, with tokenised traditional assets recorded on public blockchains increasing roughly fivefold between March 2025 and March 2026.

In the United States, one private platform processed an average of $354 billion in tokenised repo transactions per day in March 2026, four times its average daily volume a year earlier.

European institutions are also developing tokenised bonds, deposits, collateral and settlement solutions, while European central securities depositories have announced large-scale securities tokenisation initiatives.

Cipollone said the Eurosystem began accepting marketable assets issued through DLT-based services at European central securities depositories as eligible collateral in March.

Despite the growth, tokenised real-world assets remain small compared with global financial markets, with limited liquidity and secondary-market activity.

Cipollone identified fragmentation, the loss of central bank money as a monetary anchor and external dependence as the three main risks Europe must avoid.

The ECB wants to provide settlement of DLT transactions in central bank money while supporting an integrated, competitive and innovative European payments and securities ecosystem and preserving Europe’s resilience and strategic autonomy.

The Eurosystem has already conducted more than 50 trials and experiments involving 64 market participants in 2024, finding that central bank money could be used to settle transactions conducted on DLT platforms.

Cipollone said this demonstrated that access to central bank money was not merely an additional feature but a condition for tokenised finance to develop safely and at scale.

The findings have been incorporated into the Pontes and Appia projects.

Pontes is intended to connect market DLT platforms with the Eurosystem’s TARGET Services, allowing the cash leg of transactions to settle in central bank money.

The ECB intends to launch Pontes this year, initially offering attractive pricing with only one-off onboarding fees.

The service is then expected to expand its operating hours to 22.5 hours per business day and provide immediate settlement finality in the Eurosystem DLT, with a 24/7 service planned by mid-2028, alongside greater programmability, resilience and multi-currency capability.

“Central bank money does not carry credit or liquidity risk. What’s more, it serves as the common settlement anchor across the financial system,” Cipollone said.

Appia, meanwhile, addresses the broader architecture, standards and governance of a European tokenised financial ecosystem.

Its roadmap covers interoperability and standards, monetary policy implementation, collateral management, future infrastructure for tokenised central bank money, cross-border transactions and the legal and regulatory framework.

The aim is to produce a blueprint for an integrated European tokenised financial ecosystem by 2028.

Cipollone said Pontes and Appia should be regarded as complementary parts of one strategy, with operational experience from Pontes informing Appia while Appia’s findings feed into the gradual development of Pontes.

He identified three conditions for successful expansion of tokenised finance, namely common standards and interoperability, public-private cooperation and an integrated legal framework.

“Competition should be in services, quality and price, not through incompatible standards or walled gardens,” Cipollone said.

He also stressed that technological interoperability alone would not be enough.

“A genuinely integrated tokenised ecosystem must have five capabilities,” he said, explaining that systems must be interoperable, assets transferable and portable, issuers and public authorities must retain appropriate control, and assets must be programmable within a safe and legally valid framework.

Cipollone called for public authorities and the private sector to work together to ensure issuance, trading, settlement, custody, collateral and asset servicing develop alongside one another.

He also warned that advanced technology cannot compensate for fragmented law, calling for greater clarity and harmonisation across the EU on ownership rights, settlement finality, liability, custody, asset servicing and the enforceability of smart-contract outcomes.

“Technical interoperability without legal compatibility will remain incomplete and fail to overcome fragmentation,” he said.

Cipollone said Europe was now at a decisive point in determining how tokenised finance develops.

“If we act now, we can do more than just modernise settlement,” he said.

“We can use technological change to help build something Europe has sought for decades: a deeper, more innovative and more competitive capital market,” he added.