ECB Examines Blockchain-Based Central Bank Money

The European Central Bank (ECB) is exploring ways to bring central bank money onto blockchain technology. Executive Board member Isabel Schnabel discussed three possible approaches at a conference in London. The first option would involve issuing reserves directly on a programmable platform.

In the second approach, the ECB's existing real-time gross settlement system would remain in place, with an interoperability layer connecting it to Distributed Ledger Technology (DLT) platforms. The reserves would not be tokenized, but linked by hash.

The third option would tokenize reserves held at the central bank and issue settlement tokens fully backed by those reserves. These tokens would be private claims, rather than claims issued directly by the central bank.