Central bank money to remain ‘anchor’ as financial markets go digital

The Eurosystem recently unveiled the Appia roadmap, a strategic initiative aimed at shaping the development of a European tokenised financial ecosystem.

The initiative seeks to ensure that central bank money remains the anchor of the financial system as Europe undergoes rapid digital transformation.

The roadmap outlines the Eurosystem’s objectives and approach, with the project expected to conclude in 2028.

Through Appia, the Eurosystem will bring together public and private sector stakeholders, as well as academia, to build integrated, innovative and resilient tokenised wholesale financial markets across Europe.

“With Appia, we are building a road from today’s financial system to tomorrow’s tokenised markets, firmly grounded in central bank money,” said Piero Cipollone, member of the Executive Board of the European Central Bank.

At the core of the initiative is tokenisation, a process that involves representing financial assets as digital tokens on distributed ledger technology (DLT) networks.

In wholesale financial markets, this approach has the potential to improve efficiency by integrating multiple stages of an asset lifecycle, from issuance and trading to settlement, custody and servicing, onto a single platform.

It also enables the use of smart contracts, opening the door to a wide range of innovative financial solutions.

The Eurosystem’s broader strategy for tokenised wholesale central bank money rests on two complementary initiatives, namely Appia and Pontes.

The Pontes initiative is expected to be launched in the third quarter of 2026 and will enable central bank money settlement for DLT-based transactions.

Appia, by contrast, takes a longer-term view and focuses on designing the architecture of a future tokenised financial ecosystem in close cooperation with market participants.

The Eurosystem plans to crystallise its vision in a blueprint by 2028, while work under the Appia roadmap will guide both market developments and enhancements to the Pontes platform.

By preserving the role of central bank money, the initiative aims to ensure effective monetary policy implementation, safeguard financial stability and support the smooth functioning of payment systems.

At the same time, it seeks to foster a more integrated, competitive and innovative European payments and securities environment, strengthening Europe’s strategic autonomy and resilience.

The initiative is also designed to ensure the euro’s continued relevance as an international currency in an increasingly digital global economy.

The Eurosystem has invited feedback from stakeholders, publishing a questionnaire alongside the roadmap to support further analytical and practical work.

The Appia initiative builds on exploratory work carried out in 2024, marking a transition from experimentation to a concrete long-term strategy.

It will examine different configurations for DLT networks, including the potential for shared infrastructures based on common standards, which could reduce fragmentation and lower barriers to entry.

The analysis will also consider technological, market-driven, economic and geopolitical factors, including trade-offs between single shared networks and multiple interconnected systems.

Ensuring common standards and European governance will remain a central objective throughout the process.

Writing in a blog published on March 12, 2026, Piero Cipollone said the transformation of finance requires central banks to adapt their role.

“As payments and financial markets go digital, central bank money must evolve too,” he said.

He explained that while most money used in everyday transactions is created by the private sector, it is trusted because it can be converted one-to-one into central bank money, which serves as the system’s safest asset.

“This interplay helps build and maintain trust,” he said.

Cipollone noted that central bank money exists in two forms, namely cash for daily use and wholesale deposits held by banks at central banks.

He added that the Eurosystem is also developing the digital euro, a digital form of cash designed to complement banknotes and coins.

Turning to wholesale markets, he stressed that central bank deposits form the bedrock of existing financial infrastructures, enabling large-value transactions and interbank settlements.

However, he acknowledged that these markets are being reshaped by tokenisation and DLT technologies, which allow assets such as bonds to be represented digitally.

“These new technologies hold the promise of greater innovation, efficiency and integration across financial markets,” he said.

He explained that tokenised systems could enable faster and more efficient settlement, lower costs and reduced risks, while allowing entire asset lifecycles to operate on a single platform available around the clock.

“Cross-border activity will become simpler and cheaper, with lower costs across the board,” he said.

He also highlighted the role of smart contracts in enabling further innovation and improving market efficiency.

“More efficient and integrated financial markets will also mean cheaper funding for the real economy,” he said.

Cipollone stressed that the success of tokenised finance depends on the availability of a safe settlement asset in the form of central bank money.

“To reap the benefits of these technologies, investors will need a safe asset to settle transactions – central bank money,” he said.

He added that the Pontes initiative will provide an initial solution by connecting the Eurosystem’s TARGET Services to DLT platforms in 2026.

“This will provide the safety and institutional credibility that is needed if tokenised finance is to flourish in Europe,” he said.

Looking ahead, he emphasised that Appia will guide the development of next-generation financial infrastructure in Europe.

“The aim of Appia is to design the next generation of Europe’s financial infrastructure together with market participants,” he said.

He explained that the initiative will also steer market participants in building their own solutions in a way that ensures competition, integration and innovation.

“Underpinning all this will be safe, tokenised euro central bank money, giving the market the settlement anchor it needs to grow safely,” he said.

Cipollone also pointed to the geopolitical dimension of financial infrastructure, warning that Europe must avoid over-reliance on external systems.

“If Europe does not build its own digital roads, it risks having to rely exclusively on those built by others,” he said.

He added that Europe has the necessary technology and resources to maintain its independence in this field.

“Europe has both the technology and the means to avoid this dependency,” he said.

He concluded by emphasising that Appia will help replace fragmented systems with a more integrated European ecosystem, supporting broader goals such as the development of a savings and investments union.

“Through Appia, Europe is choosing to shape its own digital financial space,” he said.