ECB Pushes for On-Chain Central Bank Money Amid Dollar Stablecoin Threat

Isabel Schnabel, an Executive Board member of the European Central Bank (ECB), has emphasized that central banks must transition to on-chain systems. Speaking at Jackson Hole on August 28, Schnabel argued that if public money remains off-chain while financial assets move on-chain, dollar stablecoins will become the default cash leg, threatening European monetary sovereignty.

The ECB is taking proactive steps in this regard. Pontes, a near-term bridge infrastructure, is set to pilot in September 2026. This platform connects market distributed ledger technology (DLT) platforms directly to TARGET Services, the Eurosystem's existing payment rails. Crucially, Pontes will feature a Eurosystem-operated DLT platform for settling tokenized transactions in central-bank money on blockchain rails.

Pontes is not just a bridge; it will enable settlement finality to sit on the ECB's DLT layer, not just in T2 as before. Smart contracts are already on the roadmap for Pontes, alongside 24/7 operations. This matters for funds holding tokenized collateral, since automated margin calls and collateral substitution in real-time require both the asset and the settlement token to live on the same programmable layer.

The ECB ran DLT settlement trials with 64 participants across nine jurisdictions in 2024, settling approximately €1.6 billion in central-bank money. Project Appia is the ECB's long-term blueprint, which involves a contact group of 61 institutions starting work in September 2026. The architecture debate is live: a single unified European ledger or a network of interoperable ledgers?