Key facts
- ECB board member Isabel Schnabel urged central banks to adopt blockchain technology.
- She believes this will help safeguard their role in the financial system and improve market response.
- Schnabel suggested central banks should 'go on-chain' to provide liquidity and implement monetary policy.
- The goal is to preserve central bank money against private alternatives like stablecoins.
- Programmable transactions on blockchain could enable more agile liquidity provision.
- The ECB is already exploring blockchain integration through its Pontes and Appia initiatives.
ECB board member Isabel Schnabel has called for central banks to embrace blockchain technology to secure their central role in the evolving financial system. Speaking at the Jackson Hole Economic Policy Symposium, Schnabel argued that adopting distributed ledger technology could enable central banks to respond more effectively to market strains and enhance their monetary policy operations.
Schnabel suggested that central banks should 'go on-chain,' integrating central bank money into tokenized environments. This move, she believes, is crucial to preserve the relevance of central bank money against the rise of private alternatives such as stablecoins. The ability to program transactions on blockchain networks could allow for more agile liquidity provision, enabling central banks to apply differentiated interest rates or automate collateral requirements.
She outlined two potential implementation paths: a single European ledger for settling central bank and private money alongside financial assets, or a system of interconnected ledgers that can communicate across platforms. The ECB is already actively exploring these possibilities through its Pontes initiative, which aims to link distributed-ledger platforms with existing payment infrastructure, and its Appia project, which is examining the long-term architecture, standards, and legal framework for tokenized assets in Europe.