ECB Unveils Strong Case for Programmable Central-Bank Money

The European Central Bank (ECB) has made its strongest case yet for programmable central-bank money. In a speech at the Jackson Hole Economic Policy Symposium, ECB Executive Board member Isabel Schnabel argued that the public settlement asset must move with markets as securities and collateral become tokenised.

Schnabel stated that the question is no longer whether central-bank money should anchor the financial system, but how that money should be made available in a tokenised environment. She concluded that there is a strong case for central-bank money to become a native programmable asset, with the final settlement claim remaining on the central bank rather than being delegated to a private intermediary.

The ECB is exploring three broad architectures: tokenised reserves issued directly on a programmable ledger; links between existing payment systems and new platforms; or a private institution tokenising reserves through an omnibus account. Schnabel prefers the latter, where public money is a bridge into private ledgers rather than a separate entity.

The ECB's Project Pontes will launch next month, connecting DLT platforms with TARGET Services and providing a Eurosystem-operated ledger for settling tokenised transactions in central-bank money. The project aims to preserve stronger 'atomic' settlement, where the asset and payment change hands as one transaction, automated by smart contracts.