ECB Executive Board member Isabel Schnabel presented three models in London for putting central bank money on the blockchain. In model three, a private intermediary issues settlement tokens fully backed by central bank reserves, yet they remain private claims.
The Eurosystem consists of the ECB and the national central banks of the euro area. It runs the accounts through which banks make final settlement of payments among themselves. The balance on these accounts is central bank money, and it therefore counts as the safe basis for settlement. In tokenization, assets such as bonds or deposits move onto blockchain-based registers known as DLT platforms. What remains open, however, is the form in which central bank money arrives there.
Schnabel presented her slides "Central banks on-chain" at the Bank of England in early October 2026. The occasion was the conference "The Future of Money" in honor of Charles Goodhart. Ten days earlier, the Eurosystem had launched Pontes, the first initiative of its program for tokenized financial markets. At launch, four DLT operators had joined: Axiology, Cashlink, Clearstream and SWIAT. Thirteen market participants and the Deutsche Bundesbank take part as well. Furthermore, the separate Appia initiative is due to deliver a blueprint for the long-term architecture by 2028.
Subscribe to our newsletter
The best articles of the week, directly delivered into your mailbox.
Three models for central bank money on the blockchain
Schnabel argues that moving onto the blockchain could also let central banks modernize how they implement monetary policy. The three variants differ in whether reserves exist onchain and who represents them there. Reserves here means the balances that commercial banks hold at the central bank. In the first model, the central bank issues these balances directly on a programmable platform. They thus exist there as tokens from the outset. In contrast, the second model leaves the central bank's existing real-time gross settlement system, RTGS for short, untouched. Consequently, reserves stay in non-tokenized form. Instead, an interoperability layer connects the RTGS with the DLT platform. The slides name a trigger and a so-called hash link as the connection.
In the third model, a private intermediary tokenizes reserves that themselves remain off-chain at the central bank. On this basis, it issues settlement tokens fully backed by central bank reserves. For the holder, such a token is still a private claim and not a direct claim on the central bank. Neither of the other two models shares this feature.
Today the monetary system rests on two tiers. Customers pay with deposits at their commercial bank, while banks settle balances among themselves in central bank money. The two forms of money stand at a fixed one-to-one ratio. Moreover, the slide describes the public tier as safe, trustworthy and scalable. In Schnabel's view, a tokenized system can reproduce this structure if central bank money is available onchain. Alongside reserves, bank deposits would then exist in tokenized form too, at an unchanged one-to-one ratio. Under this condition, central bank money would thus remain the core of settlement. Commercial banks would continue to supply their customers with money and financial services.
Atomic settlement as the ECB's core argument
In the ECB's account, tokenization enables faster, safer and smarter settlement. Two properties underpin this argument. Atomicity means that the payment and the security in a trade change hands together or not at all. As a result, neither side risks delivering and getting nothing back. In addition, programmability ties settlement to predefined rules that apply automatically. A payment, for example, flows only once an agreed condition occurs.
The ECB's stated goal is to preserve the anchor role of central bank money in a digitalized world. One slide shows how modern central banks can expand liquidity elastically to cushion financial stress. To do so, it contrasts two charts. First, it shows the rate on stock-secured call loans at the New York Stock Exchange during the Panic of 1907. The slide marks the peak on October 24, 1907. The Fed only came into being in 1913, so the US had no central bank at the time. Next to it sits the Covid-19 pandemic. That chart plots the money market repo rate and the ECB's balance sheet as a percentage of euro area GDP.
Moreover, according to the presentation, tokenization could integrate Europe's financial infrastructures more closely. Central bank money would then sit on DLT infrastructure next to tokenized securities, deposits and stablecoins. On the slides, a settlement asset is whatever a recipient accepts for the final discharge of a liability. Schnabel distinguishes between public and private variants. On the public side sits digital central bank money. For retail customers, this means the digital euro project, while Pontes and Appia serve wholesale. The private side, by contrast, covers tokenized bank deposits and stablecoins. Yet the slide assigns tokenized bonds and shares to trading and investment assets. Bitcoin and Ether fall into the same group as unbacked crypto assets.
The Eurosystem's two-track DLT strategy
The Eurosystem follows a two-track strategy in which Pontes covers the short-term part. Pontes links DLT platforms to the Eurosystem's TARGET services. This lets market participants settle wholesale transactions in tokenized assets in central bank money. According to Schnabel's slides, the system combines a bridge solution with a DLT of the Eurosystem's own. Settlement runs either via T2, the existing RTGS, or via DLT. It connects market networks for tokenized securities, deposits or stablecoins. Later, round-the-clock operation and decentralized programmability are due to follow.
The 13 market participants include Deutsche Bank, Santander, Société Générale, KfW and the European Investment Bank. DZ Bank, Deka Bank, BayernLB, NRW.BANK and the Caisse des Dépôts et Consignations also take part. ABANCA, Cecabank and Memo Bank complete the list. More participants are due to join in the coming months.
Appia, on the other hand, covers the long-term part. The Eurosystem is driving the project together with Danmarks Nationalbank and partners from the public and private sectors. Experiments and analysis form the basis of the blueprint. Schnabel shows on a separate slide which architectures Appia is examining. They include a single ledger, connected networks of a Eurosystem DLT and market DLTs, and several shared ledgers. In each case, the chart separates wholesale central bank money from financial assets such as securities, deposits and stablecoins. At the same time, the ECB is working on the digital euro for retail customers, a separate project.
The ECB plans to invest its own funds in tokenized securities
Alongside the Pontes launch, the ECB announced that it would become a user of the infrastructure itself. It intends to invest a small portion of its own funds in tokenized securities and settle them via Pontes. Initially, the focus is on euro-denominated securities from central governments, regional governments, agencies and supranational institutions. The ECB named no amount or date, however. Ultimately, the ECB's Executive Board, of which Schnabel is a member, decides on the details.
A survey by Lloyds Banking Group of 100 executives at large UK financial institutions points in the same direction. For the tenth edition of its annual survey, Lloyds polled respondents between April and May 2026. They came from banks, insurers, financial sponsors and asset managers. A majority of 71% expect tokenization to reshape financial services. For 60%, the biggest benefit lies in faster payments and settlement. In addition, 77% name investment in new technology as a growth priority, up from 41% the year before. Likewise, 64% of respondents plan higher capital expenditure over the next twelve months.
