Towards an efficient and integrated digital capital market in Europe: the role of tokenisation and the Eurosystem's policy response

Prepared by Elena Banu, Alexandra Born, Johanne Evrard, Claudia Lambert and Alessandro Spolaore

Published as part of the Macroprudential Bulletin 33, April 2026.

This article describes the current landscape of tokenised assets, illustrating the potential benefits across the entire asset value chain - from issuance to distribution and sales. As the Eurosystem is working towards enabling the settlement of distributed ledger technology (DLT) transactions using central bank money by the end of the third quarter of 2026, ^[1] and outlined its vision for the evolution of Europe's payments amid rapid technological change, ^[2] we examine key enablers and barriers to unlocking the benefits of tokenisation for a digital capital market in Europe while safeguarding financial stability. These include the need for on-chain secondary market liquidity to enable scaling, as well as adaptations and harmonisation of the regulatory framework.

Based on these findings, this article highlights how tokenisation, if it scales more widely, could contribute to the savings and investments union (SIU) agenda in two major ways. First, it offers an opportunity to create a European digital asset ecosystem from the early stages, in contrast to the fragmented market for traditional financial instruments, which developed from national markets. Second, it has the potential to improve market liquidity and efficiency, which can ultimately increase the scalability and development of capital markets in Europe. In turn, this could facilitate a more efficient allocation of capital within the economy. Lastly, developing a DLT ecosystem relying on European governance and based on assets denominated in euro is essential to maintaining monetary sovereignty and strategic autonomy. Finally, this article discusses the role of public authorities - including central banks, in providing the conditions for innovation to develop in a safe and resilient manner. ^[3]

1 Exploring the landscape and use cases for tokenised assets

Tokenisation is the process of representing claims digitally in the form of tokens that carry asset information and rules on a programmable platform, using new technologies such as distributed ledger technologies (DLT). A key difference between a traditional and a tokenised asset resides in the fact that the token can include information about the asset itself (e.g. ownership details, characteristics) as well as its governing rules (e.g. transfer conditions, compliance requirements). This digital representation makes the asset programmable and allows automated enforcement of rules via smart contracts. The process can be applied to any type of asset, from physical assets like real estate and commodities to financial assets such as equity and bonds. There are two types of token: (i) "native" tokens, which are digital assets issued directly on DLT (i.e. "on chain") and (ii) "non-native" tokens, which are digital representations of existing assets (i.e. the "reference assets" that exist "off chain").^[4] One example of a native token is a bond issued directly on DLT, without being previously recorded on paper or in electronic book-entry form. Conversely, when a traditional bond is tokenised, the underlying claims are recorded on a DLT. This allows the tokenised bond to be transacted on the DLT enabling use of the new features of this technology.

1.1 Market developments

Limited publicly available data on tokenisation suggest that this small-scale market is growing rapidly. Although the market for tokenised assets is still small, it developed at a fast pace in 2025.^[5] Tokenised assets on public blockchains, which are a subset of DLT (Box 1), reached an estimated global market capitalisation of €38 billion in February 2026, up from €7.4 billion at the start of 2024 (Chart 1).^[6] This still only represents a fraction of the traditional financial markets, as global assets were estimated to have reached €241 trillion at the end of 2025.^[7] However, industry analysts see high future market potential for tokenised assets, predicting strong growth over the next couple of years, though their projections vary widely.^[8]

The market is heterogeneous, and the range of asset classes being tokenised has expanded over the past few years. Chart 1 shows the evolution of tokenised assets in terms of their market capitalisation. Tokenised money market funds (TMMFs) have experienced significant growth, doubling their market capitalisation in 2025 to around €6.3 billion. During this time, several traditional financial institutions have started to issue these innovative products. Issuances of tokenised bonds have also increased markedly since 2022, including issuances by public entities such as the European Investment Bank and the World Bank (for more details, see Born et al., 2026a).^[9] Some of the recent issuances and settlements of tokenised bonds have been conducted as part of the Eurosystem's exploratory work on new technologies for wholesale central bank money settlement in 2024.^[10] Tokenisation is being used to test use cases for other asset classes, such as public and private equity and real estate.^[11] There is currently limited evidence of secondary market trading taking place.

1.2 The life cycle of a tokenised security

The key stages in the life cycle of an asset within the current system often involve inefficiencies and costs, some of which could be mitigated through tokenisation. The life cycle of an asset refers to the series of interconnected processes and activities involved in its creation, management, distribution and use in the markets. While there are variations between the life cycle activities of different types of asset, the following stages can be distinguished: i) asset structuring and issuance, ii) trading, iii) clearing and settlement, and iv) asset servicing. Under the current system, when an asset is transferred between entities, each party separately updates their own ledger or database, and messages are sent back and forth to reconcile the changes (Figure 1). Although the current system already operates efficiently, reconciliation processes still take time, sometimes involve manual intervention, and require coordination among multiple intermediaries, leading to friction, costs and delays. The promise of tokenisation and DLT lies in the creation of a shared transparent ledger, which would make it possible to perform these functions on the same platform, reducing reliance on fragmented infrastructure. The extent to which these benefits would materialise depends on whether platforms would develop in an integrated manner since the creation and maintenance of interfaces and communication links among separate platforms is costly.

The specific features of tokenisation can in principle address some of the friction in the current system. Tokenisation is often portrayed as a potential means of addressing specific inefficiencies in financial markets (see, for example, Agur et al., 2025). Table 1 sets the stage for a discussion of these potential benefits by offering a definition of the terms generally used in the public debate on tokenisation (such as fractionalisation, programmability, composability and atomicity) and describing how these features can increase accessibility, reduce friction and create new economic arrangements.

Tokenisation could bring benefits to the different steps of the asset value chain and, as a result, the broader financial system (Figure 2). ^[18] For example, asset structuring and issuance could become more accessible to smaller entities owing to the lower transaction costs that come from improved standardisation and reducing or eliminating intermediaries. Similarly, the ability to execute transactions automatically through smart contracts has the potential to boost efficiency. The technical possibility of splitting larger assets into smaller ones through fractionalisation would be likely to enable smaller investors to access the market, increasing liquidity. Using DLT could reduce information asymmetry, as all transactions are transparently and immutably recorded on the ledger, leading to more efficient price discovery. Table 2 provides an overview of potential improvements at each step of the value chain.

Exploring the steps in the life cycle of a standard asset can help identify the benefits most likely to materialise. Table 2 provides an overview of the improvements to an asset's life cycle that tokenisation can be expected to bring. In addition, the impact at the different steps of the value chain depends on the current level of efficiency. For example, Aldasoro et al. (2023) highlight the fact that potential efficiency gains can be expected to be more limited where tokenisation is easiest and current markets are already highly efficient (e.g. bonds which already exist in digital form with mostly automated systems and streamlined processes). The most valuable - albeit more challenging - gains would stem from the tokenisation of less standardised assets or less harmonised regulatory frameworks, such as those governing syndicated loans or commercial real estate.

The benefits of DLT may play out differently over time; some might be realised in the short term, whereas others will only come to fruition in the long term. An ecosystem that gradually transitions to DLT, supported by closer integration and regulatory adaptation, will progressively unlock efficiencies over time, with varying impacts across the asset value chain (Figure 3). For example, more standardisation of asset structuring via smart contracts will likely have benefits relatively early on. Benefits in trading will likely only materialise in full over a longer period, when more automation of trades - for example through whitelisted wallets, which could replace many of the traditional manual processes related to identity checks, onboarding and trade eligibility - are paired with increased liquidity on chain (see Section 2.2).

The extent to which tokenisation delivers benefits will depend on enabling factors; it may also introduce additional risks owing to increased complexities. ^[19] Potential enablers, such as the availability of central bank money on chain, integration and interoperability, liquid secondary markets for tokenised assets and an adapted regulatory framework (as discussed below), will make the benefits of tokenisation more likely to arise. Ultimately, the extent to which the expected benefits will be realised depends on integration in the ecosystem, enabling transactions to be automatically registered on the platform where the trading and post-trading will happen, or on a platform which would be interoperable with all the other service providers. At the same time, tokenisation also introduces complexities and risks into the financial system, particularly during the transition period, when on-chain and off-chain assets coexist. Risks and financial stability vulnerabilities may materialise in different forms owing to specific tokenisation features (see Box 5 for an overview and Box 2 regarding the specific case of tokenised deposits).^[20]

2 Leveraging the potential of tokenisation for the savings and investments union: enablers and barriers to scale

This section explores potential enablers for tokenised markets to scale and deliver their expected benefits, and barriers that need to be overcome. These include: (i) the availability of central bank money on chain; (ii) integration/interoperability; (iii) the existence of secondary markets; and (iv) the regulatory framework (Figure 4).

2.1 The role of central bank money on chain

Tokenised central bank money is critical to the success of an integrated European market for digital assets. The innovative potential of tokenisation should be seized in a way that keeps central bank money as the risk-free anchor for settlement of a two-tiered monetary system where multiple public and private settlement assets, for example tokenised deposits (Box 2), coexist. At-par convertibility in transactions can only be ensured if central bank money is also made available on chain, as it functions as the ultimate unit of account (Garratt and Shin, 2023).

The results of the Eurosystem's exploratory work confirmed that there is increased demand in Europe for enabling settlement of DLT-based asset transactions in central bank money (Box 3).^[21] Being essentially risk-free, elastic and scalable, central bank money can enable digital asset market expansion and connect siloed private asset networks.^[22] In turn, this will allow tokenised markets to function in an integrated manner without the fragmentation and liquidity issues that stem from the fact that assets currently circulate within siloed networks, requiring users to hold the settlement asset native to the same DLT network to purchase tokens. Different DLTs inherently lack interoperability, requiring users to typically rely on off-ramps and bridges to acquire assets on a different network or move them across networks, which introduces costs and disruptions. With wholesale central bank money as a common settlement asset native to DLT, off-ramps can be eliminated, enabling more seamless and efficient transactions. Central bank money offers inherent scalability, capable of meeting the demands of tokenised markets efficiently.

While central bank money on chain is key to the development of tokenised capital markets, it will need to go hand in hand with private sector innovation. To leverage the benefits of DLT, multiple instruments, such as cash and assets, should be presented and accessible on chain to the different existing entities and actors in a similar way. Providing convertibility with central bank money on chain in the tokenised ecosystem will underpin trust in private settlement assets. Broader engagement by the private sector is needed to deliver the scale and depth of tokenised markets and to explore tokenisation's potential for innovation. For example, cooperation between the financial sector and industry can give rise to innovative use cases, such as using DLT to link the delivery of a product to its payment, ensuring that suppliers are paid automatically upon the delivery of goods, improving cash flow for businesses and reducing uncertainty for customers.

2.2 Integration and interoperability

Developing a European digital asset ecosystem will support a single and fully integrated European market. Unlocking the benefits of tokenisation rests on ensuring the portability and usability of assets beyond the network on which they have been issued, so that the benefits can materialise along the full asset life cycle. Fostering the development of DLT networks based on European governance and using common standards would provide the infrastructure for a future innovative ecosystem. To ensure this rapidly evolving technology does not develop in silos, with limited interoperability between networks and a lack of market-wide utilities, as in the current traditional markets, policymakers must play a proactive role in fostering integration and interconnectedness from the start. This is central to the work being carried out by the Eurosystem project, Appia (Box 3).^[24]For example, one focus point of Appia will be to analyse ways to interconnect DLT networks to enable seamless asset transfers, requiring standardised mechanisms, compatible tokenised assets, and aligned smart contract data formats across Europe. This would modernise financial market infrastructure, fostering competition, enhancing integration and driving innovation for European financial markets.^[25] The new digital ecosystem would also require a harmonised regulatory framework to be developed from the outset to ensure access and compatibility across all participants (see section 2.4).^[26]

2.3 The role of secondary markets for tokenisation

The potential of tokenisation to support capital markets hinges not only on the efficiency of the asset life cycle, but also on boosting secondary market liquidity. To leverage the benefits of DLT, it is crucial for secondary markets to develop deep and liquid trading, progressing to a more mature development stage. Liquid secondary markets are necessary to ensure price discovery, facilitate trading activity and develop a deep investor base that enables the potential benefits of tokenisation to fully materialise (Table 1). Creating the conditions for enabling liquidity include supporting market initiatives where liquidity providers and market-makers participate, fostering investor confidence, standardising practices and ensuring interoperability across DLT platforms. Without sufficient secondary market depth, tokenised assets risk remaining illiquid, limiting their utility.

Despite an increase in primary issuances on chain (Chart 1), the secondary market liquidity of DLT-based digital securities is still limited. Recent research indicates that while tokenisation already brings improvements in terms of efficiency and liquidity for tokenised bonds (Born et al., 2026a; Leung et al., 2023; and Bank for International Settlements, 2025), these benefits remain limited and could be significantly enhanced by scaling up these markets.Greater issuance - facilitated, for instance, by the extension of the DLT Pilot Regime and the integration of central bank money on chain - will drive scalability on both the issuer and investor sides.

Successfully advancing tokenisation's adoption and scalability will require the active participation of various stakeholders, a process that is already under way. A successful transition to a new ecosystem will require the active engagement of market infrastructures, such as central securities depositories (CSDs) and central counterparties (CCPs), but also of custodians, issuers - including non-financial corporates - and investors. CSDs have been actively contributing, both globally and within the EU, to advancing the integration of tokenised assets into DLT. Similarly, some CCPs have been early adopters of DLT, and have experimented or partnered with CSDs and technology firms to explore innovative uses in their collateral management.^[29] These initiatives represent a major step forward in integrating traditional financial market participants with DLT, thereby enabling the on-chain representation of highly relevant and widely traded securities. In addition, non-financial corporates - which can benefit from tokenisation through improved access to finance, a wider investor base and increased transparency - have already started to use DLT for their bond issuances, but a wider representation will be needed to create a sufficiently liquid market on chain.^[30] Collaborations between the industry and banks have also emerged to investigate the potential use of tokenised deposits for corporates' treasury and liquidity management, trade finance and payment processing.^[31]

Transitioning to tokenised secondary markets will involve electronification and the co-existence of off-chain and on-chain trading, benefiting liquidity in DLT markets. Bonds and certain categories of derivatives are often traded over the counter (OTC), where trade execution typically occurs through traditional channels such as voice communication or electronic messaging platforms.^[32] These markets would likely need to undergo substantial electronification to effectively integrate into the DLT ecosystem and fully leverage its efficiencies (GFMA, 2025). In the transition phase, two options would likely coexist: securities could be listed and traded in traditional venues, while their digital representation could be listed on a distributed ledger, in a framework similar to dual listings, where companies list fungible shares on multiple exchanges to boost liquidity and facilitate investor access.^[33] In addition, market-makers will play a key role in preventing fragmentation, bridging traditional and DLT-based venues during the transition,^[34] and supporting liquidity by providing quotes and spreads.^[35]

The integration of repos and derivatives on chain could serve as a crucial complementary service to trading, significantly contributing to liquidity development. The interplay between secondary markets and related derivatives markets has long been studied by academics and researchers and would likely also apply to tokenised markets.^[36] For example, a broader adoption of on-chain repos and an expanded pool of collateral assets would boost secondary market liquidity by facilitating the sourcing of funding and securities. In particular, intraday repo could serve as a significant advantage enabled by DLT, as it has the potential to alleviate funding liquidity challenges which may arise as a consequence of reduced settlement windows (see next section for more details). Intraday repo can enable faster on-chain provision of funding and securities, and could be particularly useful during the transition to shorter settlement cycles, as the EU prepares to move to T+1 in 2027.^[37] It would all the more be important in a DLT network which enables instantaneous settlement. The extent to which these benefits could materialise would depend on the behaviour and strategies of market participants, and, particularly in the transition phase, on the interplay between coexisting liquidity pools on traditional and tokenised platforms.

Liquidity challenges in DLT ecosystems are also linked to settlement flexibility and pre-funding requirements. While atomic settlement enables instantaneous trading and eliminates settlement fails, its applicability may be limited across certain markets or asset classes owing to the need to prefund cash and securities prior to trading. Moreover, instant settlement could pose challenges for active participants, such as market-makers, by reducing netting opportunities and increasing transactional volumes, which may necessitate adjustments to treasury management and inventory strategies (OECD, 2025; Eurex, 2025; and Chiu and Koeppl, 2019). Additionally, pre-funding may also represent a significant opportunity cost, discouraging intermediaries from consistently providing liquidity (GMFA, 2025). To support liquidity in DLT-based ecosystems, a more adaptable settlement framework allowing participants to choose between instantaneous settlement or programmable settlement on a trade-by-trade basis could offer greater flexibility and efficiency (GMFA, 2025 and OECD, 2025). Specifically, programmable settlement could be introduced to settle transactions in multiple intraday windows, and may be advantageous in settings where instantaneous settlement would entail large liquidity needs.

The inclusion of DLT-based assets as eligible collateral has the potential to enhance market confidence and drive wider adoption. The Eurosystem collateral framework is a cornerstone of effective monetary policy implementation in the euro area, enabling funding liquidity to be provided to banks in a secure and transparent way. Integrating DLT-based securities into this framework could increase demand for eligible assets in both secondary and securities financing markets, thereby increasing asset liquidity. This could incentivise corporates to embrace tokenised securities, fostering market confidence and promoting broader adoption. This mechanism generally applies to traditional off-chain financial ecosystems (Pelizzon et al., 2024) and is likely to be even more significant for tokenised assets, given their novelty. Starting in March 2026, the Eurosystem will accept DLT-based collateral issued with CSDs in Eurosystem credit operations that are mobilised through Target2-Securities and the Eurosystem Collateral Management System.^[38] The Eurosystem will further explore if, how and under what criteria assets issued using DLT and not represented in eligible securities settlement systems could become eligible and be mobilised as Eurosystem collateral in the future. This will take into account market, legal and regulatory developments.

2.4 A supportive, adapted and harmonised regulatory framework

The regulatory framework can play a role in enabling the adoption of tokenisation, fostering market integration and ensuring the system is resilient - all of which are key from an SIU perspective. There are three broad approaches to taking account of tokenisation in the regulatory framework (OECD, 2021): applying existing financial regulations to tokenised assets; introducing new bespoke regulatory frameworks; and modifying existing rules to accommodate the use of DLT in the financial markets.In the EU, a mix of approaches has been used so far, with a few Member States developing dedicated frameworks covering DLT activity in the markets (e.g. Germany, France and Luxembourg),^[39] and the EU DLT Pilot Regime proposing a temporary regime under which the existing rules for tokenised assets are applied in a more flexible manner. These approaches are explored in this section.

Some national authorities have developed national frameworks to explicitly allow tokenisation (Lavayssière, 2025). To promote innovation and align with the growing digitisation of financial instruments, several jurisdictions have taken the step of introducing legislation that explicitly recognises tokenised forms of financial assets. The French executive ordinance of 2017 is an example of a piece of legislation that allows the representation of unlisted company shares on DLT.^[40] The German Electronic Securities Act of 2021 is another example of tailor-made regulation for tokenised assets. The law establishes a legal framework for the issuance of electronic securities, eliminating the requirement for physical certificates. It also enables the use of blockchain technology for registering securities, particularly electronic bonds, and introduces a central electronic securities register.^[41]

The lack of clarity regarding the legal treatment of tokenised assets and remaining fragmentation stemming from national regulatory frameworks still creates challenges for the potential use of tokenisation, however. The EU has generally taken a technology-neutral approach to financial regulation. However, transferable securities traded on a trading venue must be recorded by a CSD. In such cases, certain definitions and requirements under the regulatory framework (the EU Regulation on Central Securities Depositories (CSDR))^[42], and the Settlement Finality Directive^[43] can pose challenges to the use of DLT. The lack of a common definition of a deposit (and as a corollary a tokenised deposit) could also pose challenges as a similar instrument could be recognised as a deposit by national authorities in one Member State but not another - preventing their use across borders.^[44] In addition, instruments that clearly fall under the scope of the Markets in Crypto-Assets Regulation (MiCAR)^[45] - which is an EU Regulation directly applicable across the EU, might have greater regulatory clarity in the EU than commercial bank deposits using similar technologies. A harmonised definition of deposits in the EU is therefore essential to preventing regulatory fragmentation, maintaining a level playing field and ensuring coordinated responses to risks in the EU.

The EU has taken the step of introducing a pilot regime for DLT market infrastructure to facilitate the trading and settlement of tokenised financial instruments, while ensuring compliance with EU-wide standards. The DLT Pilot Regime provides a regulatory space for market participants to experiment with DLT-based infrastructures under temporary exemptions from certain EU financial regulations (Box 4). Beyond the derogations of the pilot, existing EU and national frameworks for securities transactions are largely technology-neutral, meaning that tokenised securities must meet the same requirements as traditional instruments across the full value chain. The Commission's market integration and supervision package^[46] includes further proposals that aim to facilitate the use of DLT outside the pilot regime. Under these proposals, the proposed Settlement Finality Regulation would enable the designation of DLT-based systems, which could then also benefit from settlement finality protections. Additionally, the CSDR would be amended to better enable the use of DLT by CSDs, and to broaden options for settling the cash leg, referring to tokenised forms of central bank and commercial bank money and opening the possibility of using e-money tokens as a settlement asset.^[47]

National silos in the existing trading and post-trading infrastructure, in addition to regulatory limitations, are currently a cause of fragmentation and may make a wider adoption of DLT challenging if non-interoperable solutions are implemented. The prevalence of different national practices with regard to the set-up of trading and post-trading functions have resulted in national silos, which makes integration more difficult.^[55] This includes stock exchanges, CCPs and CSDs focusing solely on their domestic markets without interoperability or access by other infrastructures to the local market (Murphy, 2024). Achieving a simpler and more integrated post-trading infrastructure in a DLT world will depend on the commitment of Member States to developing a unified ecosystem at European level. This includes managing the risk that the current national silos develop standalone solutions that lead to a new fragmentation which, in addition to the multiplicity of unharmonised legal frameworks in Europe, would prevent interoperability across DLT-based infrastructure and would foster inefficiencies. At the same time, vertically integrated group structures may facilitate the introduction of DLT-based changes across all layers of the value chain, as exemplified by Eurex Clearing's launch of a solution enabling the delivery of margin collateral utilising DLT infrastructure.^[56]

As tokenisation does not eliminate the underlying fragmentation in national laws, more effort is needed to improve the regulatory framework for the Single Market in capital. A key source of fragmentation along national borders is differences and conflicts in the cross-border application of fundamental law (national corporate laws, securities laws for custody and asset servicing and tax-related processes). A coordinated approach to removing such barriers would be the best solution to ensure a level playing field and unlock the potential for scaling DLT across Europe. Further harmonisation of corporate and securities law would facilitate the cross-border issuance, holding and settlement of the securities that corporates issue across the EU and would also aid the development of tokenised markets in Europe.

Ultimately, the regulatory framework will play a crucial role in mitigating the potential negative effects of tokenisation and may need to be adapted to effectively serve this purpose. Although a comprehensive assessment of potential changes to the regulatory framework for a fully tokenised ecosystem falls outside the scope of this article, it is essential to consider these aspects as well as closely monitoring the evolution of markets to ensure that a supportive regulatory framework also safeguards overall resilience and addresses potential vulnerabilities arising from a tokenised financial system (Box 5).

3 Conclusion - a long-term vision for European capital markets and the savings and investments union

Tokenisation, enabled by DLT, is posited to improve the efficiency of capital markets, which could support the goals of the SIU. Unlike traditional finance, where the different steps of a transaction take place on siloed infrastructures, tokenisation could allow for an integrated system where tokenised assets, tokenised central bank money as the risk-free anchor, and private settlement assets such as tokenised deposits exist alongside each other. DLT networks could then host the entire life cycle of an asset on a single platform. In addition to improving and integrating existing processes, this could also enable innovation and new economic arrangements (Bank for International Settlements, 2023), ultimately improving the role of the EU financial markets in fostering productive investment, growth and integration in line with the objective of the SIU.

Tokenisation also has the potential to address the longstanding fragmentation of European capital markets and increase their scale. In a fully integrated financial market, the issuance, trading, clearing and settlement of a financial instrument should not be affected by the location of the instrument itself or of the counterparties involved in the transaction. However, Europe's financial market remains fragmented, with complex practices and procedures divided by national borders and distribution channels. This fragmentation is particularly visible in the post-trading area.^[61] Its manifestation can lead to home bias, despite the links that have been established between CSDs in EU Member States (Born et al., 2022). Tokenisation provides an opportunity to modernise and upgrade the existing financial infrastructure and to encourage broader integration across national financial systems.Beyond the improvements brought by technological innovations such as DLT and tokenisation, this will require the harmonisation of underlying regulatory frameworks and national practices (for example in securities laws and tax-related processes).

A new ecosystem could be designed in a more integrated and harmonised manner based on common rails - leading to a unified digital capital market.^[62] To achieve this, it is key to prevent an uncoordinated proliferation of DLT networks, promote interconnectedness between them, and uphold the role of central bank money as the safest and most liquid settlement asset. The Eurosystem is playing a catalysing role in pursuit of these goals with Pontes and Appia. Ultimately, tokenisation can be an opportunity to enhance the European financial market infrastructure to create a deeper financing ecosystem that benefits investment as part of the EU's strategic objectives.^[63] At the same time, key governance questions will need to be resolved in the near future, including by developing strategies to ensure interoperability with initiatives in countries outside the EU, with the aim of making the European markets more attractive and promoting the international role of the euro.^[64]

The journey towards tokenised markets will require time, continuous evolution and strategic adaptation. Modernising infrastructure entails upfront costs, particularly when it comes to modernising legacy systems, and hybrid systems are likely to coexist for the medium term, limiting potential short-term gains. For instance, the contemporaneous presence of traditional and DLT-based systems implies managing parallel environments with different operational windows and potentially other specificities. In this regard, supporting interconnectedness - both between traditional and tokenised networks and across DLT networks - will be a key enabler of scaling. These costs are expected to decrease as the market scales and matures. Reaping the benefits of tokenisation will require careful management of the transition while fostering an environment that is conducive to long-term efficiency gains.

The key conditions for mobilising tokenisation for advancing the SIU agenda are developing an EU infrastructure, underpinned by EU-wide regulation and euro-denominated settlement assets. A European governance framework is key to avoiding dependence on foreign providers for critical infrastructure and fostering strategic autonomy. Common standards and a harmonised regulatory framework are necessary to avoid fragmented implementation across the Single Market. The EU has already made significant progress in this regard, with the adoption of the Markets in Crypto-Assets Regulation (MiCAR) and the DLT Pilot Regime, which lay the groundwork for harmonised rules in the digital finance space and support innovation in a resilient framework. Furthermore, the Eurosystem is advancing toward enabling the use of central bank money for settlement on DLT, ensuring that central bank money remains the risk-free settlement anchor for the financial sector and reducing risk, enabling scale, and avoiding fragmentation. This, together with the further development of euro-denominated private settlement assets would safeguard monetary sovereignty and ensure the resilience, integration and competitiveness of the European financial system in the digital era.

References

Agur, I. et al. (2025), "Tokenization and Financial Market Inefficiencies", Fintech Notes, Vol. 2025, Issue 001, International Monetary Fund. Aldasoro, I. et al. (2023), "The tokenisation continuum< /a>", BIS Bulletin, No 72, Bank for International Settlements, April. Aquilina, M. et al. (2025), "The rise of tokenised money market funds ", BIS Bulletin, No 115, Bank for International Settlements, November.

Bank for International Settlements (2025), Annual Economic Report, June.

Bank for International Settlements (2023), "III: Blueprint for the future monetary system: improving the old, enabling the ne w", Annual Economic Report, Chapter 3, June.

Bank for International Settlements and Committee on Payments and Market Infrastructures (2024), "Tokenisation in the context of money and other assets: concepts and implications for central ban ks", CPMI Papers, Bank for International Settlements, October.

Basel Committee on Banking Supervision (2024), "Novel risks, mitigants and uncertainties with permissionless distributed ledger technolog ies", Working Papers, No 44, Bank for International Settlements.

Benos, E., Garratt, R. and Gurrola-Perez, P. (2019), "The Economics of Distributed Ledger Technology for Securities Settle ment", Ledger, Vol. 4, pp. 121-56.

Blanco, R. et al. (2005), "An empirical analysis of the dynamic relationship between investment-grade bonds and credit default swaps", The Journal of Finance, Vol 60, Issue 5.

Born, A. et al. (2026a), "Tokenised bonds: assessing efficiency and liquidity in a nascent market",Macroprudential Bulletin, Issue 33, ECB, April.

Born, A. et al. (2026b), "Tokenised money market funds: new technology, familiar risks?", Macroprudential Bulletin, Issue 33, ECB, April.

Born, A. et al. (2022), "Frictions in debt issuance procedures and home bias in the eu ro area", Financial Integration and Structure in the Euro Area, Box 3, ECB, April.

Budau, V. and Tourpe, H. (2024), "ASAP: A Conceptual Model for Digital Asset P latforms", IMF Working Papers, Vol. 2024, Issue 019, International Monetary Fund.

Koczan, G. and Rouveyrol, C. (2025), "Integrating the EU's post-trading landscape", "Capital markets union: a deep dive", Occasional Paper Series, No 369, Box 5, ECB, May.

Chiu, J. and Koeppl, T. V. (2019), "Blockchain-Based Settlement for Ass et Trading" The Review of Financial Studies, Vol 32, Issue 5, pp. 1716-1753.

Cipollone, P. (2024), "Towards a digital capital ma rkets union", Keynote speech at the Bundesbank Symposium on the Future of Payments, 7 October.

Cipollone, P. (2026), "A highway for the future of Europe's dig ital finance", ECB Blog, 12 March.

Cipollone, P. (2026b), "Building the rails for Europe's tokenised fina ncial markets", Keynote speech, 23 March.

Eurex (2025), "The role of Central Counterparties in a D LT environment", February.

Eurosystem (2026a), "Appia - paving the way for a future-ready, integrated financial ecosystem leveraging token isation and DLT", 11 March.

Eurosystem (2026b), The Eurosystem's comprehensive payments strategy, 31 March.

Financial Stability Board (2024), "The Financial Stability Implications of Tokenisation", October.

Garratt, R. and Shin, H. S. (2023), "Stablecoins versus tokenised deposits: implications for the si ngleness of money", BIS Bulletin, No 73, Bank for International Settlements, April.

Global Financial Markets Association (GFMA) (2023), "Impact of Distributed Ledger Technology in Glob al Capital Markets".

Global Financial Markets Association (GFMA) (2025), "The Impact of DLT in Capital Markets: Ready for Ad option, Time to Act", August.

Ho, A. et al. (2024), "The Ecology of Automated Market Makers", Bank of Canada Staff Discussion Paper.

IOSCO (2025), "Tokenization of Financial Assets", November.

Jappelli, R. et al. (2022), "Price and liquidity discovery in European sovere ign bonds and futures", SAFE Working Paper Series, No 350.

Lavayssière, X. (2025), "Legal Structur es of Tokenised Assets", European Journal of Risk Regulation, pp. 1-13.

Leung, V. et al. (2023), "An Assessment on the Benefi ts of Bond Tokenisation", Hong Kong Institute for Monetary and Financial Research (HKIMR)Research Paper, No 17/2023.

Massa, M. and Zhang, L. (2012), "CDS and the Liquidity Prov ision in the Bond Market", INSEAD Working Paper, No 2012/114/FIN.

Mills, D. et al. (2016), "Distributed ledger technology in payments, clearing, and settlement", Finance and Economics Discussion Series, No 095/2016, Board of Governors of the Federal Reserve System.

Murphy, D. (2024), "Fragmentation in the Foundations of SIU - The Case of Equity Market Post-Trade Infrastructure", SSRN Library.

OECD (2025), "Tokenisation of assets and distributed ledger technologies in financial markets: Potential impediments to market developm ent and policy implications", OECDBusiness and Finance Policy Papers, No 75, OECD Publishing, January.

OECD (2021), "Regulatory Approaches t o the Tokenisation of Assets", OECD Blockchain Policy Series, OECD Publishing, March.

Panzarino, O. et al. (2016), "BTP futures and cash relationships: a high frequency data analysis", Banca d'Italia Working Paper, No 1083.

Pelizzon, L. et al. (2024), "Collateral eligibility of co rporate debt in the Eurosystem", Journal of Financial Economics, Vol. 153, No 103777.

Pinna, A. and Ruttenberg, W. (2016), "Distributed Ledger Technologies in Securities Post-T rading: Revolution or Evolution", Occasional Paper Series, No 172, ECB, April.

Roland Berger (2023), "Tokenization of real-world assets: unlocking a new era of ow nership, trading, and investment", October.

Tanveer, U., Ishaq, S. and Hoang, T. G. (2025), "Tokenized assets in a decentralized economy: Balan cing efficiency, value, and risks", International Journal of Production Economics, Vol. 282, No 109554.

Tokenized Asset Coalition (2024), "State of Asset tokenisation 2024", September.

Vlassopoulos, T. (2025) "Making wholesale central bank money fit for the digital age" Keynote speech, 7 November.

World Economic Forum (2025), "Asset Tokenization in Financial Markets: T he Next Generation of Value Exchange", May.