ECB's Schnabel Unveils Three Models for Central Bank Money Onchain

Isabel Schnabel, an Executive Board member at the European Central Bank (ECB), has outlined three models for bringing central bank money onto programmable infrastructure. In a recent presentation, Schnabel highlighted the importance of preserving central bank money's anchor role alongside CBDCs, tokenized deposits, and stablecoins.

The first model, direct issuance, involves the central bank operating a programmable platform where reserves are natively tokenized. This allows participants to have direct access to central bank money on the ledger, potentially enabling tokenized reserves and financial assets to operate within the same environment.

The second approach uses bridging or synchronization, keeping central bank reserves offchain while connecting them with a programmable DLT platform through triggers or hash-linked mechanisms. This model closely reflects Europe's evolving tokenized settlement infrastructure without requiring a complete replacement of current payment rails.

The third model delegates tokenization to a private intermediary, which issues settlement tokens fully backed by central bank reserves. Those tokens remain private claims rather than direct central bank liabilities onchain.

The ECB is already testing hybrid infrastructure through Pontes, launched in September with a dual settlement model using TARGET2 or Eurosystem DLT. Planned upgrades include 24/7 availability and decentralized programmability.