Tokenisation Can Break 2% Intermediation Cost Barrier
Summary
ECB Executive Board Member Piero Cipollone delivered a keynote address at Harvard Law School examining whether tokenisation and distributed ledger technology can break the persistent 2% unit cost barrier in financial intermediation. The speech notes that despite significant technological advances since the late 19th century, the unit cost of connecting borrowers to savers has remained broadly constant at approximately 2% of intermediated assets in the United States, Germany, France, and the United Kingdom. Cipollone argues that tokenisation represents a genuinely different technology that could allow efficiency gains to flow to end users, but emphasises that this outcome is possible but not guaranteed, and outlines conditions necessary for such transformation.
“The unit cost of financial intermediation in the United States has remained roughly constant, at around 2% of intermediated assets.”
What changed
The speech examines the historical persistence of the 2% financial intermediation cost barrier across major economies and evaluates whether current technological advances in tokenisation and distributed ledger technology are fundamentally different from prior waves of financial innovation. Cipollone argues that unlike previous technological improvements that failed to reduce aggregate intermediation costs, tokenisation offers a genuinely novel architecture that could lower costs for borrowers and savers. The address is informational and does not create compliance obligations. Financial institutions and technology firms engaged in tokenisation development should note the ECB's analytical framing of conditions necessary for cost reduction to flow through to end users.
Scheduled event
- Date
- 2026-04-15
- Location
- Washington DC
Archived snapshot
Apr 21, 2026GovPing captured this document from the original source. If the source has since changed or been removed, this is the text as it existed at that time.
Piero Cipollone: Sparking the transformation of finance - tokenisation and the role of central banks
Keynote address by Mr Piero Cipollone, Member of the Executive Board of the European Central Bank, at the 24th Annual Symposium "Building the financial system of the 21st century: an agenda for Europe and the United States", hosted by the Harvard Law School and the Program on International Financial Systems, Washington DC, 15 April 2026.
Central bank speech | 20 April 2026 by Piero Cipollone PDF full text (172kb) | 8
pages Today I will discuss the role of technology in the future of finance. I will seek to outline the conditions needed for technological innovations to genuinely enhance the economic efficiency of the financial system, focusing on tokenisation and distributed ledger technology (DLT) as a case in point.
Financial innovation should help capital find its most productive use and risk find its best owner at the lowest possible cost. These efficiency criteria have been used to justify and judge every major wave of innovation in modern finance, from the development of derivatives markets to electronic trading and dematerialisation. The distributional effects of innovation also need to be taken into account – that is, whether the gains from innovation are passed on to borrowers and savers or absorbed along the way.
The historical record on this is striking and should make us pause for thought.
Since the late 19th century, the financial sector has expanded enormously and technology has made markets more efficient. Yet the cost of connecting a borrower to a saver has barely moved at the aggregate level. The unit cost of financial intermediation in the United States has remained roughly constant, at around 2% of intermediated assets. These estimates also broadly hold for European countries such as Germany, France and the United Kingdom.
So the question I would like to address today is whether tokenisation can break with the historical pattern, allowing technical efficiency gains to reach borrowers and savers. I will argue that this is possible because, with tokenisation, we now have a technology that is genuinely different from what came before. It is possible but by no means certain. I will therefore outline the conditions that are necessary to achieve such a positive outcome, including the role that central banks can play in enabling this transformation.
The views expressed in this speech are those of the speaker and do not necessarily reflect those of the BIS. About the author Piero Cipollone More from this author
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