The European Central Bank is examining three distinct technical models for bringing central bank money onto blockchain infrastructure, a question with direct bearing on how tokenized assets will eventually be settled across the eurozone. Isabel Schnabel, a member of the ECB's Executive Board, set out the options during a conference hosted by the Bank of England in London.
The first model would have the central bank issue reserves directly on a programmable platform, embedding central bank money natively within blockchain infrastructure. The second, more conservative approach preserves the ECB's existing settlement system as it stands, connecting it to external platforms through a hash-based interoperability layer rather than converting reserves into tokens outright. The third option involves tokenizing reserves deposited at the central bank, producing settlement tokens backed by those funds. Under this model, the tokens would represent claims against private entities rather than money issued directly by the central bank itself.
Schnabel was clear that none of the three proposals amounts to a decision. The ECB is still weighing the trade-offs between them, with implications for how much of the settlement process remains under direct central bank control versus how much is delegated to intermediaries operating on blockchain-based infrastructure.
A Two-Tier System to Remain Intact
Whichever model the ECB eventually favours, the institution intends to preserve the two-tier structure that underpins the euro area's monetary system. Central bank reserves would continue to form the settlement base, while commercial banks retain their role providing money and financial services directly to companies and households. The blockchain question, in other words, concerns the plumbing beneath the system rather than a redesign of who serves end users.
Infrastructure Already in Motion
The debate is not purely theoretical. Pontes, a settlement initiative, began operating in September to enable wholesale settlement of tokenized asset transactions using central bank money, giving the ECB a live testbed for some of the questions Schnabel raised in London. Separately, Appia is studying different architectures for organising a future European infrastructure for tokenized markets, work that runs parallel to the ECB's own deliberations on which settlement model to pursue.
Together, these projects suggest the ECB is moving deliberately rather than urgently, building technical groundwork and running pilots while reserving judgment on the architecture that will ultimately underpin euro-denominated settlement of tokenized assets. For market participants in Europe building tokenization platforms, the choice between the three models will determine how directly they can access central bank money and on what technical terms.
