ECB Outlines Blockchain-Based Central Bank Money Models

The European Central Bank (ECB) has outlined three models to introduce central bank money into blockchain-based financial markets. The ECB aims to enable DLT-based asset transactions, including tokenized securities, deposits, and stablecoins, to be settled in central bank money.

According to the ECB's approach, there are three ways to use central bank money in distributed ledger technology (DLT) environments: direct issuance of tokenized central bank reserves, bridging and synchronizing existing payment systems with DLT platforms, and tokenizing reserves through private intermediaries.

The first model involves the central bank issuing reserves directly as tokens on a programmable ledger. The second approach keeps central bank money in existing systems while linking them to DLT platforms to settle transactions. The third model has private intermediaries depositing reserves at the central bank and issuing tokens on DLT networks backed one-to-one by those reserves.