Lawrence Damilola
An official from the European Central Bank (ECB) is proposing the adoption of a “European ledger,” or a unified platform that would bring digital assets and money across Europe onto a single system.
At a symposium hosted by the German central bank recently, ECB Executive Board member Piero Cipollone noted that such a ledger could reduce fragmentation in the region’s financial markets.
Cipollone highlighted that Europe’s conventional capital markets are divided and face the challenge of inconsistent laws, yet there is an opportunity to establish a cohesive platform for digital assets. He described the idea as a “digital capital markets union,” underscoring the possibility of achieving a more unified financial system.
DLT Adoption in EU Banks
Distributed ledger technology (DLT) has already gained traction among banks in the European Union. “More than 60% of banks in the European Union are exploring or experimenting with DLT, and another 22% already use it,” Cipollone stated. He pointed out that while DLT presents an opportunity for financial integration, it does not inherently solve the issue of fragmented markets.
“Non-interoperable technological ecosystems in each country – shaped by diverging national regulatory regimes – have created siloed pools of asset liquidity, further entrenching fragmentation,” Cipollone said. He also indicated that while DLT is currently being used mainly for issuing assets, its potential could extend to negotiation, settlement, and custody. This could help reduce costs and enable continuous operations.
Central Bank Money as a Cornerstone of Stability
Cipollone also emphasized the importance of central bank money as a key element in ensuring stability. “Our primary objective in this evolving landscape is to ensure that central bank money – the safest and most liquid settlement asset – remains a cornerstone of stability, even in a capital market based on tokens and DLT,” he said.
The concept of a unified ledger, where both cash and assets coexist on the same platform, has been supported by other institutions, including the Bank for International Settlements. He noted that traditional finance may also benefit from the flexibility provided by competing DLT platforms.
Per Cipollone, the ECB continues to explore ways to settle DLT transactions with central bank money but said, “Relying on existing interoperability solutions over the long term could perpetuate inefficiencies.”
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Lawrence does not hold any crypto asset. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
