ECB Ponders Blockchain Integration for Central Bank Money

The European Central Bank (ECB) is exploring three models for bringing central bank money onto blockchain, according to Executive Board member Isabel Schnabel. At the Bank of England's Future of Money conference in London, Schnabel outlined these options as part of the ECB's effort to integrate central bank money with decentralized ledger technology (DLT).

The first approach would involve issuing reserves directly on a programmable platform. The second option would see the ECB's existing real-time gross settlement system remain intact, with an interoperability layer connecting it to DLT platforms. In this scenario, the reserves themselves wouldn't be tokenized, but the two systems would be linked by hash.

The third approach involves tokenizing reserves held at the central bank and issuing settlement tokens fully backed by those reserves. These tokens would be private claims, rather than direct claims issued by the central bank.

Schnabel emphasized that an onchain monetary system could retain the two-tier structure used today, with central bank money remaining at the core of settlement while commercial banks continue to provide financial services to customers.