ECB to Move Reserves Onchain in High-Stakes Bet on Programmable Finance

The European Central Bank (ECB) is planning to move its central-bank reserves onto programmable infrastructure, also known as onchain reserves. This is a significant development in the world of finance and technology, with far-reaching implications for the way money is created, stored, and transferred.

The ECB's Executive Board member Isabel Schnabel has been advocating for this move, arguing that it would improve settlement, collateral management, and monetary policy implementation. She sees potential uses beyond securities settlement, including automating collateral calls, releases, and substitutions, as well as applying different remuneration conditions to balances.

The ECB is pursuing this objective through two connected projects with different time horizons. The first project, Pontes, will connect DLT market platforms with existing TARGET Services, allowing tokenized assets to settle using central-bank money. This is expected to start in September 2026. The second project, Appia, will define the architecture, standards, and role of central-bank money in Europe's longer-term tokenized wholesale market.

The ECB has not yet decided whether Europe needs one shared ledger or several interoperable networks. Schnabel noted that when central-bank money sits on a separate ledger, smart contracts need reliable information from another network to complete settlement, which can weaken atomicity.