Tokenisation could reshape Europe’s financial infrastructure by allowing securities, payments and other assets to move through programmable digital systems.
The European Central Bank is now advancing two projects, Pontes and Appia, designed to turn earlier experiments with distributed ledger technology into an operational framework for tokenised finance.
<h3>Why Europe Sees An Opportunity</h3>
European capital markets remain highly fragmented. The EU currently has 31 central securities depositories, 14 central counterparties and 323 trading venues. Even within groups containing several securities depositories, more than 95% of transactions by both volume and value in 2023 were settled between participants using the same individual depository.
Tokenisation could reduce some of this complexity. Instead of moving a financial asset through separate systems for issuance, trading, clearing, settlement, custody and servicing, several stages could operate within a shared digital environment. Smart contracts could automate processes such as coupon payments, collateral transfers and compliance checks.
The technology is gaining momentum. The value of traditional assets tokenised on public blockchains rose from €4.7 billion at the end of the first quarter of 2025 to €23.3 billion one year later, roughly a fivefold increase. However, tokenised assets still represent a small part of global financial markets, with limited liquidity in many segments.
<h3>Pontes Brings Central Bank Money</h3>
The Eurosystem tested DLT settlement technology with 64 market participants across more than 50 trials and experiments in 2024. Those tests demonstrated that transactions conducted on distributed ledgers could be settled using central bank money.
Pontes is intended to turn that work into an operational service. It will connect market DLT platforms with the Eurosystem’s TARGET Services, allowing the cash side of tokenised transactions to settle in central bank money.
The ECB plans to extend the service progressively, with operating hours reaching 22.5 hours per business day. By mid-2028, the target is a 24/7 service offering greater programmability, stronger resilience and multi-currency capabilities.
<h3>Appia Targets A Wider Market</h3>
Pontes focuses on settlement, while Appia addresses the broader structure of a European tokenised financial ecosystem. Its work covers interoperability, standards, collateral management, cross-border transactions, regulation and the future infrastructure for tokenised central bank money.
The project aims to produce a blueprint for an integrated European tokenised financial ecosystem in 2028. One possible model would use a common shared network, while another could connect multiple networks through interoperable standards.
<h3>Standards Could Decide Success</h3>
Technology alone will not create an integrated market. Different networks must be able to exchange information and assets while preserving ownership rights, legal finality and regulatory controls.
The ECB identifies three central requirements: common technical standards, close cooperation between public institutions and private companies, and a more harmonised legal framework across the EU. Without them, tokenisation could simply reproduce existing fragmentation in a new technological form.
The challenge is therefore larger than making settlement faster. Europe is attempting to determine the rules and infrastructure of a financial system while that system is still developing. If compatible standards, trusted settlement assets and legal certainty evolve together, tokenisation could become a tool for creating a more connected European capital market rather than another collection of isolated platforms.
