Piero Cipollone, a member of the European Central Bank’s (ECB) Executive Board, delivered a compelling speech at the Bundesbank Symposium on the Future of Payments, advocating for Europe to embrace digital assets and distributed ledger technology (DLT) to create a more cohesive capital markets union.
In his address, Cipollone emphasized the need for Europe to move towards digital technologies to streamline its financial system, reduce costs, and enhance market efficiency. He highlighted the current fragmentation within Europe’s financial landscape due to multiple listing exchanges and trading platforms, which hinder integration and competitiveness on a global scale. Despite initiatives like the TARGET2-Securities platform, regulatory barriers and inconsistent legislative frameworks continue to impede progress.
Cipollone stressed the importance of harmonizing rules on asset custody, tax processes, and regulatory supervision to unlock the full potential of a unified capital market in Europe. He underscored the significance of accelerated efforts to align regulations across EU member states to drive integration and enhance market competitiveness.
The rise of digital assets presents an opportunity for Europe to transform its financial markets. Cipollone identified tokenization as a crucial driver for financial transformation, offering opportunities to improve liquidity and reduce transaction costs. Digital assets on DLT operate on decentralized networks, revolutionizing traditional bookkeeping systems and enabling real-time transactions.
Moreover, Cipollone highlighted the increasing interest in DLT solutions among EU banks, with many exploring and implementing these technologies. However, he emphasized that the full potential of DLT remains untapped, urging public authorities to support the transition to digital markets and ensure central bank money plays a pivotal role in this transformation.
To facilitate this transition, Cipollone proposed the creation of a European ledger, a shared platform where digital assets, central bank money, and commercial bank money coexist on interoperable systems. This unified infrastructure would streamline services, reduce barriers to entry, and promote capital market integration.
Cipollone cautioned against the risk of further fragmentation if individual countries and institutions develop isolated platforms without coordination. He called for closer collaboration between regulators, central banks, and market participants to ensure Europe leads the way in building a unified digital capital market.
In conclusion, Cipollone emphasized the transformative potential of tokenization in shaping an integrated financial ecosystem for Europe’s markets in the digital age. By acting decisively now, Europe can pave the way for a more efficient, interconnected, and competitive financial landscape.