ECB Executive Calls for Blockchain-Based Central Bank Money

European Central Bank (ECB) Executive Board member Isabel Schnabel has called for moving central bank money onto blockchain networks to modernize the financial system. Speaking at the Jackson Hole economic symposium on Aug. 28, Schnabel argued that this shift would help central bank money retain its role as the foundation for settlement while unlocking the programmability of distributed ledger technology.

The proposal aims to enhance the efficiency of monetary operations by enabling automatic transfers when predefined conditions are met, such as in securities settlement or conditional payments. This would reduce the need for intermediaries and streamline processes that currently rely on manual reconciliation.

The ECB's focus is on wholesale applications, where financial institutions use central bank money for interbank settlements, complementing existing payment systems rather than replacing them. Schnabel's remarks align with the ECB's ongoing digital euro project, which focuses on a retail version for citizens. However, her emphasis on wholesale use suggests a parallel track that could modernize the financial backbone without disrupting public access to central bank money.