European financial institutions should assess whether the Single Euro Payments Area (SEPA) can be extended into tokenized payments, Bank of Italy Deputy Governor Chiara Scotti said, as policymakers look for ways to keep euro-denominated settlement central to digital finance.
Scotti called a tokenized extension of SEPA an “important area for reflection” during a Monday speech at the Digital Assets and Monetary Policy Transmission workshop in Rome, saying Europe’s existing payments framework offers scale, shared standards and interoperability.
Her comments come as the Eurosystem prepares a pilot for Pontes, a distributed ledger technology settlement initiative designed to link market DLT platforms with TARGET Services and settle transactions in central bank money. The pilot is expected by the third quarter of 2026.
The European Central Bank (ECB) is also developing Appia, a longer-term roadmap for Europe’s tokenized financial ecosystem that is expected to conclude in 2028, as policymakers weigh how tokenized deposits, stablecoins and central bank money should coexist.
The ECB said it was exploring ways to bring central bank money onto DLT due to concerns over the adoption of a non-euro stablecoin, which may have “serious consequences for Europe’s monetary sovereignty,” such as diminishing the euro’s role and creating a dependency on foreign settlement assets.
Banca d’Italia, ECB, EABCN, and CEPR Workshop on‘Digital Assets and Monetary Policy Transmission.’ Source: Bank of Italy
ECB says stablecoin adoption may shift bank deposits
The ECB has previously outlined concerns related to widespread stablecoin adoption.
In a report published in November 2025, the ECB said that widespread stablecoin adoption may see households replace some of their bank deposits with stablecoin holdings, leading to significant bank deposit outflows.
“Significant growth in stablecoins could cause retail deposit outflows, diminishing an important source of funding for banks and leaving them with more volatile funding overall.”
In a working paper published on March 4, 2026, the ECB highlighted further risks, including that stablecoin adoption induces a “deposit-substitution mechanism, whereby funds shift from retail bank deposits to digital assets.”
Related: UBS partners with five banks for Swiss franc stablecoin sandbox
Later on March 23, Piero Cipollone, a member of the ECB’s Executive Board, said that both tokenized deposits and stablecoins need tokenized central bank money as a public settlement anchor for scaling Europe’s tokenized financial system, Cointelegraph reported.
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