Piero Cipollone, member of the Executive Board of the European Central Bank (ECB), urged Europe to embrace digital assets and distributed ledger technology (DLT) to create an integrated capital markets union.
Cipollone spoke on October 7 at the Bundesbank Symposium about the future of payments outlined how digital technologies can reshape Europe’s fragmented financial system, reducing intermediation costs and improving market efficiency.
Fragmentation
Cipollone pointed out that Europe’s 35 different listing exchanges and 41 trading platforms contribute to an inefficient and divided financial landscape. He added that despite efforts such as the TARGET2-Securities platform, which harmonizes securities settlements across the continent, regulatory barriers and inconsistent legislative frameworks continue to hinder integration.
Cipollone stressed that without harmonized rules on asset custody, tax processes and regulatory oversight, Europe remains unable to fully realize the synergies of a single capital market. He added that this fragmentation makes European markets less competitive globally and called for accelerated efforts to align regulations in EU member states.
According to Cippolone:
“The lack of unified supervision or permanent safe ownership has left Europe’s capital markets fragmented.”
The EU has taken steps toward integration, but Cipollone argued that these efforts need to be intensified, especially with the rise of digital assets. Tokenization, the process of issuing assets based on distributed ledger technology (DLT), offers the opportunity to create a more efficient system from scratch, bypassing traditional market inefficiencies.
Integrated market
Cipollone highlighted tokenization as a key driver of financial transformation, offering significant opportunities to improve liquidity and reduce transaction costs. Unlike conventional financial assets, digital assets on distributed ledgers do not rely on a central database, but instead operate on a synchronized network of decentralized traders.
According to Cippolone:
“This could mark the shift from age-old accounting systems to a future of decentralized, real-time transactions.”
He also noted that more than 60% of EU banks have started exploring DLT solutions, with 22% actively using these applications. However, he further stated that the full potential of DLT remains untapped.
Cipollone urged public authorities to act quickly to support the transition to digital markets and ensure that central bank money is a key settlement tool in this transformation. He 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 ledger would enable financial institutions, central securities depositories (CSDs) and market participants to provide services directly on a unified infrastructure, reducing entry barriers and promoting capital market integration.
He also warned that failure to coordinate DLT adoption could further entrench existing fragmentation as individual countries and institutions develop siled platforms. The ECB director further called for closer cooperation between regulators, central banks and market participants to ensure that Europe takes the lead in building a unified digital capital market.
Cipollone added:
“The transformative potential of tokenization goes beyond efficiency. By acting now we can shape an integrated financial ecosystem that will serve European markets well into the digital future.”