The European Central Bank on Wednesday unveiled the timetable for a eurozone initiative to shape the development of a tokenized wholesale financial ecosystem around a single currency and ensure the euro’s continued relevance as an international currency.
In a post on its website, the bank said the strategy includes Pontes, a distributed ledger technology (DLT) layer for transactions expected to launch in the third quarter, and Appia, which will “focus on working with the market to develop a fully innovative and integrated financial market ecosystem that embraces tokenization and DLT.”
Appia is at the center of the strategy, which is scheduled to run until 2028, when the Eurosystem (the monetary authority composed of the European Central Bank and the central banks of euro-using countries) plans to publish a blueprint outlining its vision for a tokenized financial ecosystem. It aims to explore the long-term architecture of a tokenized financial system, including infrastructure, governance and standards.
“The initiative aims to foster a more integrated, competitive and innovative European payments and securities environment, strengthen Europe’s strategic autonomy and resilience, and ensure the continued influence of the euro as an international currency,” the statement said.
European policymakers increasingly view financial infrastructure as a geopolitical issue, warning that reliance on non-European payment networks and a dollar-centric financial system will expose the EU to external pressure. An analysis by the European Parliament last year found that Europe’s reliance on foreign payment networks represented a “structural vulnerability” to its financial sovereignty and could be a source of geopolitical leverage.
The project is also part of a wider push by the Eurosystem to adapt financial infrastructure to the rise of distributed ledger technology, or blockchain, which allows financial assets such as bonds, funds and securities to be represented in the form of digital tokens on a shared network.
“Appia aims to build a path from today’s financial system to tomorrow’s tokenized markets, firmly rooted in central bank currencies,” Piero Cipollone, a member of the ECB’s executive board, said in a statement.