Isabel Schnabel, a member of the ECB Executive Board, has proposed three methods for integrating central bank money with distributed ledger technology. The focus is on wholesale settlements, specifically the reserves commercial banks hold at the ECB for interbank payments, rather than retail digital euro projects.
The preferred approach involves the direct issuance of tokenized reserves on a programmable platform. This would allow the ECB to conduct monetary policy directly on the blockchain, utilizing smart contracts to automate repo transactions, collateral management, and liquidity provision.
Alternative methods include maintaining the existing real-time gross settlement system linked to DLT platforms, or utilizing private intermediaries to issue settlement tokens backed 1:1 by funds held in omnibus accounts at the ECB.
The Eurosystem has already launched the Pontes solution to facilitate settlements for tokenized asset operations. Current participants include Deutsche Bank, Santander, Societe Generale, and Clearstream. Full implementation of the system is expected by 2028.
Additionally, the ECB is developing the Appia project to define the long-term architecture for Europe's tokenized financial market. A conceptual framework for this initiative is scheduled for completion by 2028.
