Schnabel Calls for ECB to Adopt Blockchain to Safeguard Its Role
ECB board member Isabel Schnabel is urging the European Central Bank to adopt blockchain technology to protect its role at the heart of the financial system. Speaking at the annual Jackson Hole Economic Policy Symposium, Schnabel argued that embracing blockchain would enable the ECB to respond faster to market strains and preserve the role of central bank money.
Schnabel pointed out that central banks around the world are struggling with the rise of blockchain-based finance, where transactions are settled on distributed digital ledgers rather than through traditional market infrastructure. To reap the full benefits, Schnabel believes that central banks need to 'go on-chain' and bring central bank money into the tokenized environment.
She cited research suggesting that programming transactions on blockchain networks could make central banks more agile when providing liquidity. For instance, they could apply differentiated interest rates or automate collateral requirements. Schnabel mentioned a single European ledger where central-bank and private money would be settled, similar to South Korea's Project Hangang.
The ECB is already exploring the integration of blockchain technology into its payment system through initiatives like Pontes and Appia. While Schnabel's comments focused on the potential benefits, she did not address any potential challenges or drawbacks associated with adopting blockchain technology.