The European Central Bank has sketched out three possible ways of bringing central bank money onto blockchain-based infrastructure, as the Eurosystem continues to weigh how tokenisation might reshape wholesale payments without displacing its own role in settlement.
The outline came from Isabel Schnabel, a member of the ECB's Executive Board, who spoke at the Bank of England's "Future of Money" conference, held in honour of economist Charles Goodhart. Schnabel presented the models as the range of options the ECB is weighing as it explores how distributed ledger technology, or DLT, could be woven into existing payment systems.
Three models on the table
The first model would see reserves issued directly on a programmable platform. Under this approach, banks could use central bank money directly within a DLT infrastructure, without relying on a separate settlement system.
The second model keeps the ECB's existing real-time settlement system in place, connected to DLT platforms through a technical link. In this version, the reserves themselves are not tokenised; the two systems are simply linked.
The third model would use reserves held at the central bank as the backing for private settlement tokens. These tokens would be fully backed by reserves, but legally they would represent a claim against the issuing provider rather than against the ECB itself.
Pilot projects underway
The ECB is already testing some of this thinking in practice. Last month it launched a project called Pontes, which connects DLT-based transactions with the existing TARGET services of the Eurosystem, the infrastructure used for settling large-value payments across the euro area.
A second project, Appia, is examining how a future market for tokenised assets could be structured technically, whether through a single shared ledger or through multiple interconnected networks.
According to the ECB, both Pontes and Appia are intended to demonstrate how blockchain technology can be absorbed into the existing financial system without abandoning the central role of central bank money in settlement.
For now, the ECB has not indicated which of the three models it favours, or on what timeline any of them might move beyond the pilot stage. The projects nonetheless mark a more concrete step in the central bank's engagement with tokenisation, moving the discussion from conceptual frameworks toward tested infrastructure linked to the euro area's existing settlement systems.
