ECB’s Schnabel sets out central banks’ on-chain options

Isabel Schnabel, a member of the European Central Bank’s Executive Board, outlined three ways central banks could support on-chain settlement in an October 1 presentation at the Bank of England in London. The presentation also reported that Pontes, a Eurosystem initiative connecting central bank money with distributed-ledger transactions, had launched on September 21, 2026.

The European Central Bank’s presentation, titled “Central banks on-chain” and dated October 1, 2026, was prepared for The Future of Money conference celebrating Charles Goodhart. Its central proposition was that tokenisation could improve settlement while preserving central bank money’s role as the monetary system’s anchor. The account here draws on that presentation, rather than a transcript of Schnabel’s remarks.

What tokenisation changes

The slides identify two features behind the potential settlement gains. Programmability allows settlement to depend on conditions that are executed automatically. Atomicity means the different legs of a transaction complete together—or none completes—rather than leaving one side settled and the other outstanding.

The presentation also argues that tokenisation could help integrate Europe’s financial infrastructure. That is framed as a potential benefit, not a measured outcome: the slides do not quantify time savings, cost reductions or improvements in market integration.

Keeping public money at the centre

Schnabel’s framework retains the existing two-tier structure of money. In the conventional system, wholesale central bank money is the public settlement asset, alongside privately issued bank deposits. The slides depict deposits at different banks maintaining a one-to-one relationship with central bank money.

A tokenised system could reproduce that arrangement using tokenised wholesale central bank money and tokenised commercial-bank deposits. The distinction matters because moving a claim onto a digital ledger does not, by itself, make that claim central bank money.

The presentation separately classifies settlement assets and investment assets. Its settlement framework includes retail and wholesale central bank digital currencies, tokenised deposits and stablecoins. Its investment categories include tokenised financial and non-financial assets as well as unbacked crypto-assets such as Bitcoin and Ether. The digital euro project sits on the retail side, while Pontes and Appia feature in the wholesale framework.

To explain why central banks remain important, the slides highlight their ability to expand liquidity in response to financial stress. They illustrate the point with charts covering the 1907 panic and the COVID-19 period; these are historical context, not evidence of the performance of tokenised settlement.

Three routes to on-chain settlement

The first option is direct issuance: central bank reserves would exist natively as tokens on a programmable platform. The second is bridging or synchronisation, in which an interoperability layer links a real-time gross settlement system with a distributed-ledger technology platform. Under this approach, reserves remain non-tokenised.

The third option uses a private intermediary to issue settlement tokens fully backed by central bank reserves. Here, the reserves stay off-chain and the token represents a private claim. The presentation therefore distinguishes reserve backing from direct ownership of a tokenised central bank liability.

Pontes moves ahead; Appia explores architectures

According to the presentation, Pontes combines a bridge solution with a Eurosystem distributed ledger to offer tokenised central bank money for settling distributed-ledger transactions. The slides describe a dual settlement model via “TARGET2 or DLT” following the September 21 launch.

Round-the-clock availability and decentralised programmability are listed as planned enhancements. They should not be read as capabilities already delivered at launch.

Appia addresses the broader design of a tokenised financial system. The presentation sets out architectures including a single unified ledger, interconnected networks and multiple shared ledgers, bringing wholesale central bank money together with assets such as securities, deposits and stablecoins. It describes an exploration of alternatives, rather than announcing a final architecture.

Source document

“Central banks on-chain,” issued by the European Central Bank, October 1, 2026: an 11-page presentation covering settlement design and project status at that date. Relevant sections are pages 2–4 on tokenisation and monetary structure, pages 6–7 on asset categories and implementation options, and pages 8–10 on Pontes and Appia. Source: https://www.ecb.europa.eu//press/key/date/2026/html/ecb.sp261001_1~a0be67193b.en.pdf