Tokenovate’s Response to the Draghi Report and the European Commission’s Savings and Investments Union Proposal.
Earlier this year, Richard Baker, Founder and CEO of Tokenovate, and Ciarán McGonagle, Chief Legal & Product Officer, met with senior members of the Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) in Brussels. Over the past two decades, the Director General of DG FISMA John Berrigan has been instrumental in shaping Europe’s financial regulatory architecture, championing the Capital Markets Union (CMU) and steering key reforms across EU financial markets.
Our discussion included a reflection on the enduring relevance of the Giovannini Group reports. When the first report was published in 2001, it was responding to a defining moment in European financial integration: the introduction of the Euro and a wider policy commitment to harmonise financial market infrastructure. The reports identified critical inefficiencies in cross-border clearing and settlement and laid the foundation for subsequent regulatory and structural reforms aimed at deepening Europe’s capital markets.
Significant progress has been made since 2001, with initiatives like TARGET2-Securities (T2S), and regulation such as MiFID II and the Central Securities Depositories Regulation (CSDR) dismantling many of the original Giovannini barriers. Yet, legal uncertainty and operational inefficiencies persist.
Today, we find ourselves at a similar moment of convergence – this time shaped by commercial, economic, technological, and legal forces that have the potential to resolve the remaining inefficiencies in European financial markets. The recent Draghi Report underscores the urgency of this moment, calling for substantial investments of €750–€800 billion annually to bolster EU competitiveness, close innovation gaps, and support economic sovereignty. Complementing this, the European Commission’s newly proposed Savings and Investments Union aims to unlock Europe’s substantial household savings – estimated at €10 trillion – and channel them more efficiently into productive investments. Both developments reinforce the imperative to modernise Europe’s post-trade infrastructure as an essential step toward realising these ambitious economic goals.
Unlike in 2001, we now have powerful new tools at our disposal. Digitisation, automation, and new technologies such as DLT and AI present real opportunities to remove these residual barriers, streamlining settlement, enhancing transparency, strengthening supervisory coherence, reducing costs, and fostering investment and growth across the European Union and beyond.
We believe that the time has come for a new Giovannini moment – one that reimagines financial market integration through the lens of digital assets and emerging technology. Just as the early 2000s laid the foundation for harmonisation through regulatory reform, today’s inflection point offers a chance to complete that journey, using these new innovations to achieve the long-standing vision of a truly integrated financial system, not just in the European Union but across global capital markets.
Call to Action
We now stand at a unique inflection point where regulatory clarity, foundational legal frameworks, and mature digital technologies have all converged with a commercial appetite to lower operational overheads. At the same time, a macroeconomic imperative to stimulate sustainable growth has intensified the search for more integrated, efficient financial systems. The Draghi Report’s call for substantial annual investments to enhance EU competitiveness, coupled with the Savings and Investments Union (SIU) proposal to unlock trillions in household savings, further amplifies the urgency and importance of removing remaining barriers to efficient cross-border clearing and settlement.
Taken together, these forces create the perfect environment for a bold push to dismantle the final barriers to a truly unified and digitised market infrastructure.
We urge EU policymakers, industry leaders, and regulatory authorities to convene a new Giovannini Group – one that examines both the residual and newly emerging barriers to cross-border clearing and settlement. This initiative must directly align with the goals of the SIU, focusing explicitly on integrating and consolidating Europe’s trading and post-trade infrastructures to reduce fragmentation, enhance market efficiency, and support supervisory convergence across Member States.
In particular, this new effort should:
- Expand legal harmonisation so that tokenised securities and blockchain registries achieve formal recognition under EU law, dispelling uncertainty about settlement finality and digital asset ownership, facilitating the smooth, cross-border flow of capital necessary to support integrated European financial markets.
- Embrace operational standardisation by promoting the adoption of the Common Domain Model (CDM) and interoperable data formats; both essential stepping stones to true cross-border straight-through processing, thereby directly reducing operational and transaction costs in line with SIU’s vision of consolidated and interoperable market infrastructures.
- Foster inclusive participation in decentralised financial infrastructure, ensuring that smaller institutions and fintechs can access post-trade solutions without onerous burdens or duplicated investment, thereby enabling local markets to benefit from broader, deeper pools of capital, enhancing their resilience, competitiveness, and access to funding for key economic sectors such as digital innovation, defence, sustainability, and infrastructure.
- Support the European Commission’s ambitious legislative proposals aimed at removing barriers to market-led consolidation and integration, including revisions to rules on central securities depositories, financial collateral, and settlement, alongside updates to trading market structure frameworks.
- Encourage the European Supervisory Authorities (ESAs) to leverage their supervisory convergence tools more effectively, while actively supporting upcoming legislative efforts aimed at strengthening supervisory coherence and potentially shifting supervisory responsibilities to the EU level to ensure robust and uniform market oversight.
The European Commission’s pioneering work on the DLT Pilot Regime, the Capital Markets Union, and now the SIU, has laid a powerful foundation.
We believe now is the time to go further, tackling deep-seated structural inefficiencies and completing the vision of harmonisation envisioned by Alberto Giovannini, Mr. Berrigan, and their colleagues two decades ago. Only by fully integrating Europe’s capital markets and streamlining its supervisory structures can we realise a genuinely unified, resilient, and globally competitive financial ecosystem. The Draghi report and the Savings and Investments Union proposal confirm that Europe is ready for this bold step forward.
