Citi Research: Tokenization May Be a Key Solution to Fragmentation in EU Capital Markets

Jinse Finance reported that Citi Research released a report titled "Reshaping European Capital Markets," pointing out that the efficiency of EU capital markets is limited due to highly fragmented infrastructure, tax systems, and legal frameworks, and tokenization is seen as a potential solution. According to the report, the EU currently has 36 central securities depositories and 13 central counterparties, most of which operate as monopolies in their domestic markets. There are also obstacles such as fragmented tax policies and legal differences. The survey shows that 100% of respondents believe that unifying legal, tax, and corporate action frameworks should be prioritized, and they prefer adopting pan-European "regulations" rather than "directives" that require transposition by member states. Although only 32% support advancing options such as distributed ledgers and digital assets, when focusing on digital solutions, the popularity of securities and collateral tokenization (36%) is three times higher than the use of AI in post-trade processing and reconciliation (12%), reflecting the market's attention to addressing high settlement and custody costs through tokenization.