Lagarde says digital euro can end Europe’s payments dependence

ECB’s Lagarde Advances Pontes and Appia Tokenized Finance Projects

European Central Bank President Christine Lagarde on Monday used a keynote speech at an ECB conference in Frankfurt to press the case for the Eurosystem’s two flagship tokenized finance initiatives, warning that without central bank money as a settlement anchor, the nascent sector risks splintering into “private islands.”econostream-media

Central Bank Money as Settlement Anchor

Speaking at the “Money in transition: digitalisation and innovation in payments” conference, Lagarde said market participants had made clear they would not issue digital assets at scale until they could settle in central bank money. “Without a credible, risk-free asset to settle in, tokenized finance will splinter into private islands and fail to reach escape velocity from its current sandbox status,” she said.europa

The ECB president confirmed that the Eurosystem’s Pontes project would begin settling tokenized transactions in central bank money later this year, while the broader Appia initiative would draw up a blueprint with the market for a single European tokenized financial system. Pontes is scheduled to launch in the third quarter of 2026, connecting distributed ledger technology platforms to the Eurosystem’s TARGET Services infrastructure. Appia, whose roadmap was published in March, aims to deliver a long-term ecosystem blueprint by 2028.econostream-media

Geopolitics and Fragmentation

Lagarde framed the projects as a response to simultaneous pressures from technological change and geopolitical competition over financial infrastructure. She noted that ownership of financial infrastructure was becoming “an instrument of power” and that Europe’s wholesale markets remain fragmented, with 32 central securities depositories compared with two in the United States.econostream-media

Tokenization could help overcome that fragmentation by allowing ownership and payment to be recorded on shared ledgers, she said, but only if underpinned by public money. “Nothing else is trusted and accepted by all, and nothing else can expand and contract with the market’s needs so that liquidity is there when the system most needs it,” Lagarde said.econostream-media

Building on 2024 Trials

The initiatives build on exploratory work conducted in 2024, when 64 market participants carried out more than 50 trials across nine jurisdictions, settling roughly €1.6 billion in DLT-based transactions. Since late March 2026, marketable assets issued on DLT have been eligible as collateral in Eurosystem credit operations. Lagarde called on the private sector to invest in technology and agree on common standards, and urged governments to provide legal certainty through a common framework for digital assets.crowdfundinsider