Schnabel Pushes Central Banks to Go On-Chain Amid Pontes System Launch
Isabel Schnabel, a member of the European Central Bank's Executive Board, is pushing for central banks to adopt blockchain technology and go on-chain themselves. She believes that central bank reserves need to become natively programmable assets to anchor settlement in the digital age.
The timing of her comments comes as the Eurosystem's Pontes system, which settles tokenized transactions in central bank money, is set to launch in September. The system has dropped its pilot label and will be moving forward as a production service.
Schnabel emphasized that central bank money must go on-chain itself or risk losing its anchor role as finance moves onto blockchain. She also stated that stablecoins can complement this system but not replace it, as only a central bank can expand liquidity without limit in a crisis.
The ECB is currently facing three major questions related to liability and governance: who is liable if a smart contract fails, how are new participants admitted to the system, and who decides on software upgrades. Schnabel raised these questions but did not provide answers.