ECB Charts Three Paths to Bring Central Bank Money Onchain

Schnabel outlines three models for central bank money onchain

Isabel Schnabel, a member of the European Central Bank (ECB) Executive Board, set out three models for bringing central bank money onchain. She presented the framework at the Bank of England's Future of Money conference in London on 1 October 2026. Schnabel said tokenisation allows for faster, safer and smarter settlement. She pointed to programmability, where settlement follows rules executed automatically, and atomicity, where the legs of a transaction settle together or not at all. Earlier coverage: ECB's Pontes Gives Banks a Central-Bank Answer to Stablecoins →.

ECB wants central bank money to anchor digital settlement

Schnabel framed the proposals as a way to keep central bank money as the anchor of the financial system as settlement moves onto digital infrastructure. Going onchain would also let central banks modernise how they implement monetary policy, she said. The framework treats tokenised central bank money, tokenised deposits and stablecoinsREAD → as settlement assets, distinct from unbacked crypto assets such as bitcoin and ether held for investment.

The three models differ in how reserves are tokenised

Under the first model, the central bank would issue reserves directly on a programmable platform, with the reserves natively tokenised. Under the second, the ECB would keep its real-time gross settlement system and connect it to distributed ledger technology (DLT) platforms through an interoperability layer. Reserves would remain untokenised under that approach, linked instead by a hash. Under the third model, reserves held at the central bank would be tokenised to fully back settlement tokens. Schnabel described those tokens as private claims rather than direct claims on the central bank. Each model preserves the two-tier monetary system. Central bank money stays at the core of settlement, while commercial banks continue to serve customers.

Pontes and Appia projects test tokenised settlement in Europe

The framework builds on two Eurosystem initiatives. The Pontes project launched on 21 September 2026. It offers tokenised central bank money for the settlement of DLT-based transactions through a dual model using either TARGET2 or DLT. The ECB plans further enhancements, including 24/7 availability and decentralised programmability. A second project, Appia, examines a range of tokenised market architectures, from a single unified ledger to interconnected networks and multiple shared ledgers.

Lloyds survey shows banks expect tokenisation to reshape finance

The framework comes as financial institutions sharpen their focus on tokenisation. Lloyds' tenth annual Financial Institutions Sentiment Survey, covering 100 senior decision-makers at the UK's largest institutions, found that 71% expect tokenisation to reshape financial services. Faster payments and settlement were cited as the biggest benefit by 60% of respondents, followed by collateral and liquidity management at 41%. Some 77% named investment in new and emerging technologies a growth priority, up from 41% in 2025. Lloyds has already tested the technology. Earlier in 2026, working with Archax and the Canton Network, the bank completed the UK's first public blockchain transaction, using tokenised deposits to buy a tokenised gilt.

"The real opportunity is to make financial markets work faster, more efficiently and with greater flexibility for clients.", 2 October 2026. — Rob Hale, Co-Head of Global Markets, Lloyds

Private euro stablecoins show the stakes for central banks

Private settlement assets, including euro-denominated stablecoins, sit alongside central bank money in Schnabel's two-tier framing. EURC, a euro stablecoin, traded at $1.12 with a market capitalisation near $272 million at the time of publication (CoinPaprika, 2 October 2026).

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