ECB Seeks Euro Blockchain Integration, Citing Stablecoin Risks
The European Central Bank (ECB) has expressed interest in issuing euros directly onto a blockchain. Executive Board member Isabel Schnabel made this case at the Jackson Hole symposium on Friday, arguing that stablecoins are not suitable for settlement purposes.
Schnabel emphasized that her objection to stablecoins is not about their safety or stability but rather about what happens during times of panic. In such situations, a central bank can create more money, whereas a stablecoin issuer cannot.
The ECB's concern stems from the potential for private tokens to become widely used in settlement, which would lead Europe to settle its transactions in dollars instead of euros.
The ECB is currently testing a project called Pontes, which aims to link TARGET Services (the eurozone's settlement backbone) to market blockchain platforms. This initiative has already seen successful tests, with 64 institutions across nine jurisdictions running 58 use cases and settling nearly $1.6 billion in central bank money.
Schnabel weighed three options for implementing the ECB's vision: issuing tokens directly, bridging from existing systems, or allowing private firms to tokenize reserves through an omnibus account. She favors the first option, which would enable the ECB to run repo operations in code and exert greater control over the system.