AFME Outlines Vision for Distributed Ledger Technology Transformation of European Capital Markets

AFME Outlines Vision for Distributed Ledger Technology Transformation of European Capital Markets

(IN BRIEF) AFME has published a new paper outlining its vision for a DLT-based transformation of European capital markets, advocating for a shift from centralized and fragmented systems to a network-based, interoperable architecture driven by private-sector innovation. The proposed model includes regulated DLT platforms, public-permissioned ledgers, and a multi-chain ecosystem designed to improve efficiency, liquidity, and connectivity across markets. AFME also sets out key policy recommendations, including integrating central bank and commercial bank money into DLT systems, enabling collateral eligibility for digital securities, and establishing interoperability standards to prevent fragmentation. While supporting public-private collaboration, the organization emphasizes that financial asset platforms should remain market-driven to ensure innovation and flexibility. Overall, AFME believes that with the right policy support, DLT can significantly enhance the performance and resilience of European capital markets.

(PRESS RELEASE) LONDON, 30-Apr-2026 — /EuropaWire/ — Association for Financial Markets in Europe has released a new paper outlining its vision for a future distributed ledger technology (DLT)-based architecture for European capital markets, along with a set of recommendations aimed at policymakers to support the transition toward a more efficient and interconnected financial system.

The proposal comes at a time of increasing institutional focus on DLT adoption, including initiatives such as the European Central Bank’s Appia project and broader efforts in the UK to coordinate digital finance development. AFME’s framework emphasizes the need to move beyond the current centralized yet fragmented market structure toward a more flexible, network-based model that leverages the capabilities of distributed systems.

At the core of AFME’s vision is the concept of a regulated, network-driven infrastructure where multiple financial entities collaborate through DLT platforms. This approach, described as a “Distributed Finance” model, is intended to enhance efficiency, resilience, and innovation by enabling automation, connectivity, and seamless interaction across market participants.

The proposed architecture includes several key elements. These include network-based DLT platforms operated by regulated entities, public-permissioned ledger systems that balance accessibility with regulatory oversight, and a multi-chain ecosystem connected through standardized interoperability frameworks. Together, these components aim to facilitate the efficient movement of assets and liquidity across different networks.

To support the development of such an ecosystem, AFME has identified a number of policy priorities. These include accelerating the integration of central bank money into DLT environments through initiatives like Pontes, enabling collateral eligibility for DLT-based securities to enhance market liquidity, and establishing robust interoperability standards to prevent fragmentation. The organization also highlights the importance of developing a two-tier banking system on DLT by incorporating commercial bank money into digital networks, as well as updating legal and regulatory frameworks to support scalable DLT-based settlement systems.

Coen ter Wal, Managing Director and Head of Technology and Operations at AFME, noted that Europe has a significant opportunity to modernize its capital markets by embracing DLT. He emphasized that a market-driven, network-based approach—supported by private-sector innovation and appropriate regulatory frameworks—will be essential to unlocking the full benefits of the technology.

While AFME supports collaboration between public and private sectors, it cautions against relying on fully centralized, public-sector-operated ledger systems as the foundation for capital markets. Instead, it advocates for a model in which private-sector platforms manage financial asset ledgers, with public-sector systems, including central bank digital money, interoperating to maintain liquidity and stability.

With the right regulatory and infrastructure developments, AFME believes that DLT can play a transformative role in enhancing the efficiency, competitiveness, and resilience of European capital markets while maintaining financial stability.

Notes:
1. The Association for Financial Markets in Europe (AFME) is the voice of the leading banks in Europe’s financial markets, providing expertise across a broad range of regulatory and capital markets issues. We represent over 150 leading global and European banks and other significant market players. Our members play a vital role in Europe’s financial ecosystem, underwriting around 90% of European corporate and sovereign debt, and 85% of European listed equity capital issuances. Importantly, AFME members are market makers, providing liquidity, which is essential for ensuring financial markets can function efficiently. We also represent law firms and other associate members which advise market participants and support AFME’s legal and regulatory initiatives. For more information please visit the AFME website: www.afme.eu

2. Follow us on X, formerly Twitter @AFME_EU

Media Contact:

Rebecca Hansford
rebecca.hansford@afme.eu
+44 (0)20 3828 2693

SOURCE: AFME