DIGITAL ASSETS, PAYMENT EFFICIENCY AND MONETARY POLICY
Speech by Piero Cipollone, Member of the Executive Board of the ECB, at a workshop on digital assets and monetary policy transmission organized by the European Central Bank, Banca d’Italia, the Euro Area Business Cycle Network, and the Centre for Economic Policy Research, Rome, 4 May 2026.
Introduction
Digitalisation and tokenisation are fundamentally reshaping payments and finance. These advancements hold the promise of enhancing financial services and lowering expenses, but they also pose significant considerations for central banks.
The Role of Central Banks in Tokenisation
To harness the economic efficiency promised by tokenisation, central banks must position themselves strategically. This involves not only supporting the financial system’s transition to a more digitized environment but also ensuring monetary policy’s effectiveness, financial stability, and the preservation of monetary sovereignty.
Understanding Tokenisation
Tokenisation and distributed ledger technology (DLT) represent a unique class of financial innovation. Unlike traditional innovations that merely enhance existing systems, tokenisation operates as a general-purpose technology that can redefine the entire financial framework. By enabling assets to be represented as digital tokens, recorded on DLT networks, tokenisation facilitates the complete transaction lifecycle within a single, always-accessible digital platform.
The Paradigm Shift
This revolutionary approach to finance necessitates a market-wide adoption of complementary innovations. The transition to a tokenised system creates a coordination challenge, as individual components of the financial infrastructure cannot independently shift the system towards a new economic paradigm. This barrier diminishes the incentive for entities to adopt new technologies proactively.
Market Structure Considerations
The configuration of the future DLT ecosystem remains a critical topic. A unified network may streamline processes but could stifle competition, whereas multiple interconnected networks could foster innovation but risk liquidity fragmentation. Establishing common standards across the board is vital to facilitate market integration and prevent the creation of isolated ecosystems.
Contributions of Central Banks
The central bank can significantly expedite the acceptance of tokenisation and DLT within the financial system. As the issuer of central bank money and the facilitator of liquidity backed by collateral, their role is essential. Introducing tokenised central bank money and ensuring that tokenised assets qualify as collateral for monetary policy operations will vitalize the DLT marketplace.
Encouraging Market Development
Another vital contribution from the central bank involves catalyzing the development of an integrated and competitive tokenised market. Without a clear vision for architecture and standards, the marketplace may devolve into a disjointed collection of networks, thus hindering liquidity and innovation.
Implications for Monetary Policy
A proactive stance by central banks in this digital evolution has implications for monetary policy, financial stability, and sovereignty. Relying exclusively on private settlement assets, such as stablecoins, can lead to volatility and fragmentation, undermining the efficacy of monetary policy and complicating stability.
Conclusion
To summarize, while tokenisation has the potential to enhance efficiencies and reform financial intermediation, central bank involvement is crucial. Maintaining a balance between public and private forms of money is vital to navigating this transformative landscape. The Eurosystem is committed to this balanced approach, ensuring stability and innovation coalesce within the emerging tokenised financial ecosystem.
