Central Banks May Move Money Onto Distributed Ledgers Using Smart Contracts

European Central Bank Executive Board member Isabel Schnabel has proposed that central banks move their money onto distributed ledgers using smart contracts. Speaking at the Jackson Hole Economic Policy Symposium on August 28, Schnabel argued that blockchain and smart contracts could fundamentally modernise monetary-policy implementation and financial-market settlement.

Her proposal focuses on wholesale central-bank reserves rather than a retail cryptocurrency or conventional digital euro. Under the model, central-bank money would exist natively on a distributed ledger alongside tokenised securities and commercial-bank money, allowing transactions and monetary-policy operations to execute directly through programmable infrastructure.

Schnabel warned that keeping central-bank reserves outside blockchain networks while private financial markets migrate on-chain could weaken public money's position as the ultimate settlement asset. The proposal is not purely theoretical, with the Eurosystem already pursuing two projects designed to bring central-bank money into tokenised financial markets.