During a hearing of the European Parliament’s ECON committee yesterday, ECB Executive Board member Piero Cipollone made a forceful case for public sector involvement in wholesale tokenized finance, calling it “extremely important” and warning that without it, the opportunity could be lost.
He argued that if the ECB does not provide a wholesale central bank money settlement asset (wCBDC) on DLT, there are two likely outcomes. “Either the market will never develop because people will not want to run the risk of a settlement asset that brings credit risk. So the market would never develop, and therefore we lose this opportunity. Or the market will go for only private solutions in the form of stablecoins,” he said, emphasizing that the ECB is not against private solutions.
Providing central bank money alongside private solutions would make the market more robust and increase demand across the board. “So we think that there will be a constellation of solutions, central bank money, tokenized deposits, and possibly stablecoins. As long as you have a menu of choice, let the market decide which solution is best.”
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