This report examines how tokenization may reshape European financial sovereignty. Tokenization does more than digitize existing assets: it makes it possible to separate and recombine dimensions of monetary systems once considered inseparable. This creates new opportunities for financial integration but may also yield new forms of infrastructural and monetary dependence.
Tokenized financial assets require both digital settlement infrastructures and compatible forms of money. If tokenized markets develop primarily around non-European infrastructures and dollar-denominated stablecoins, technological modernization could reinforce rather than reduce Europe’s financial dependence. Preserving European financial sovereignty therefore requires shaping the emerging ecosystem of tokenized finance through resilient European settlement infrastructures, competitive euro-denominated digital money, and supervisory frameworks capable of monitoring the financial architecture as a whole.
The Paper argues that tokenization may reduce fragmentation within individual financial ecosystems while increasing fragmentation between them. It redraws the existing borders of the global financial systems according to a new geopolitical map and yields an archipelago of tokenized ecosystems.
About the Author:
Bastien Buchwalter is an Assistant Professor of Finance at SKEMA Business School in Paris, France.