ECB Executive Board member Isabel Schnabel stated that central banks must embrace blockchain technology to maintain their financial system role and improve market response. She argued that staying off-chain risks private stablecoins becoming the default cash leg, threatening European monetary sovereignty.
Central banks' adoption of blockchain technology is crucial for maintaining monetary sovereignty and ensuring the stability of financial systems as assets become increasingly tokenized. Failure to integrate could cede control over the 'cash leg' of transactions to private stablecoins, particularly dollar-denominated ones, impacting the Eurosystem's influence and the effectiveness of monetary polic
ECB Executive Board member Isabel Schnabel has issued a strong call for central banks to embrace blockchain technology, arguing it is essential for maintaining their relevance and improving market responsiveness in an increasingly tokenized financial landscape. Speaking at the Jackson Hole Economic Policy Symposium, Schnabel warned that if central bank money remains off-chain while financial assets migrate to distributed ledger technology (DLT), private dollar stablecoins could become the default cash leg, thereby threatening European monetary sovereignty.
The ECB is actively pursuing this integration through its Pontes initiative, a near-term bridge infrastructure set to pilot in September 2026. Pontes will connect market DLT platforms directly to the Eurosystem's TARGET Services and will feature a Eurosystem-operated DLT platform for settling tokenized transactions using central-bank money. Future developments for Pontes include smart contracts and 24/7 operations, which are crucial for real-time collateral management.
Schnabel, in conjunction with a paper by Stanford's Darrell Duffie, distinguished stablecoins as complements rather than substitutes for central bank money, suitable for edge payments but lacking the elastic liquidity provision vital in crises. The ECB's 2024 DLT settlement trials, involving 64 participants across nine jurisdictions and settling approximately €1.6 billion, underscore this commitment. The Bank for International Settlements (BIS) General Manager Pablo Hernández de Cos reinforced this alignment, stating that stablecoins are not credible large-scale payment instruments and that tokenized deposits settling in central-bank money represent a cleaner private-money path.
The differing approaches between Europe and the US were highlighted: Europe is developing public on-chain reserves, while the US is advancing regulated dollar stablecoins. This race for on-chain central bank money is framed as a significant macroeconomic story. For investors in tokenized real-world assets (RWAs), the development of settlement infrastructure like Pontes is critical for enabling risk-free euro cash tokens necessary for delivery-versus-payment (DvP) settlement.
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