ECB’s Cipollone Says Stablecoins and Tokenized Deposits Need Central Bank Money To Scale

European Central Bank Executive Board member, Piero Cipollone, has cautioned that the growing ecosystem of stablecoins and tokenized deposits will require a trusted public anchor in the form of central bank money, public-private cooperation, and a stronger legal framework to achieve true stability.

While giving a keynote in Brussels, he that while private digital assets play a significant role, they cannot fully substitute the safety of government-backed currency in a tokenized economy.

 

Cipollone’s remarks highlight the Eurosystem’s push to integrate traditional financial safety with Distributed Ledger Technology (DLT). He noted that fiat-backed stablecoins frequently fail to trade exactly at par, which creates friction for large-scale institutional settlement and long-term financial stability across the euro area.

Strategic infrastructure for tokenized markets

To address these gaps, the ECB is advancing its “Appia” roadmap and the “Pontes” initiative, a dedicated Eurosystem blockchain. This infrastructure aims to connect various private DLT platforms with the existing TARGET services, allowing for seamless settlement in central bank money by the third quarter of 2026.

According to the ECB, the absence of a common on-chain settlement asset limits the ability of European capital markets to scale. Without it, issuers and investors remain exposed to credit and liquidity risks inherent in private settlement assets, which could undermine Europe’s broader monetary sovereignty in the digital age.

Europe’s digital currency shift

The move reflects a broader trend of central banks racing to provide regulated alternatives to private stablecoins. Earlier this year, ECB policymakers reiterated that commercial bank money is “bound to become fully tokenized,” necessitating a digital euro to maintain the two-tier monetary system that has historically balanced public and private interests.

As the ECB doubles down on the need for a central bank money anchor, conversations are increasingly framing stablecoins as potential threats to funding stability while positioning tokenized deposits as the more scalable, regulation‑friendly on‑chain cash for Europe’s next phase of tokenized markets.

The European Central Bank (ECB) is actively working to anchor stablecoins and tokenized deposits to central bank money. Through the “Appia” and “Pontes” initiatives, the ECB is advancing the integration of Distributed Ledger Technology (DLT) with the TARGET settlement system, aiming for central bank money settlement by the third quarter of 2026.

This integration is seen as crucial for providing a secure, public anchor necessary for stable, sovereign tokenized markets within Europe. The ECB has made it clear that for these digital assets to succeed in Europe, they must operate under the Eurosystem’s robust regulatory and settlement framework. This approach is intended to prevent the “sub-optimal” scenario of foreign-denominated digital currencies gaining excessive dominance.