TL;DR
European Central Bank Executive Board member Isabel Schnabel is urging central banks to move reserve money onto programmable infrastructure as tokenized finance expands. Speaking at Jackson Hole on August 28, she argued that commercial banks already hold digital reserve balances, but those balances remain separated from the distributed ledgers where tokenized securities and collateral may trade. Her core proposal is to place central-bank reserves directly onchain so assets and final payment can settle inside the same programmable environment. The idea remains focused on wholesale finance and does not create a consumer-facing ECB cryptocurrency or blockchain wallet.
The logic centers on atomic settlement. A tokenized bond can move on a distributed ledger while its cash leg still travels through conventional TARGET services, forcing participants to coordinate two systems. If both the asset and payment exist in one programmable environment, ownership can change only when the money arrives, and the entire transaction can be cancelled if either side fails. Schnabel’s argument is that programmable central-bank money could reduce reconciliation while preserving the safest settlement asset. She also sees regulated stablecoins retaining a supporting role, but not replacing central-bank money for final wholesale settlement.
The ECB’s immediate step is Project Pontes, scheduled to launch in September 2026. It will connect market-operated distributed ledgers with Eurosystem TARGET services, allowing tokenized transactions to settle in central-bank money without requiring each platform to create its own private settlement asset. Pontes is the first practical test of whether Europe’s institutions actually want central-bank money beside tokenized assets. Initially, legal settlement finality for the cash leg will remain in TARGET2, while smart-contract functionality and continuous 24/7 operation are planned for later phases as the ECB evaluates reliability, demand and transaction volumes.
Longer term, Project Appia is studying Europe’s architecture and is expected to produce a blueprint by 2028. Options include a unified ledger for reserves, commercial-bank money and financial assets, a Eurosystem ledger connected to platforms, or several interoperable networks. Each model creates tradeoffs involving governance, liquidity, confidentiality and concentration. The larger policy shift is that the ECB is no longer treating tokenized markets as separate from central-bank infrastructure. Schnabel wants reserves, collateral operations and tools such as programmable repo functions to move at the speed of onchain markets, while keeping final settlement anchored in central-bank money.
