ECB's Schnabel Calls for Central Banks to 'Go On-Chain' Amid Tokenized Finance Push
European Central Bank Executive Board member Isabel Schnabel called on central banks to adopt blockchain technology to stay relevant in the financial system. Speaking at the Jackson Hole Economic Policy Symposium, Schnabel argued that programmable distributed ledgers could modernize how central banks implement monetary policy, manage collateral, and provide liquidity.
The ECB has been exploring wholesale settlement on distributed ledgers for over two years, with tests of blockchain-based wholesale transactions set to begin in early 2024. Schnabel framed the move as essential for the euro area to keep pace with tokenized finance and prevent private alternatives like stablecoins from eroding central-bank money's role.
Schnabel outlined two possible architectures for bringing central-bank money on-chain: a single European ledger or a network of multiple ledgers. The ECB is already moving, with its Pontes initiative set to launch next month and connect distributed-ledger platforms to TARGET payment and settlement services.