The European Central Bank is examining a trio of pathways to integrate central bank funds onto distributed ledger technology, as stated by Executive Board member Isabel Schnabel on Thursday during the Bank of England’s Future of Money event held in London.
A first possibility involves the central authority distributing reserves natively on a programmable network. Alternatively, the ECB’s current real-time gross settlement network would stay operational, supported by an interoperability bridge bridging it to DLT frameworks, based on Schnabel’s presentation. The underlying reserves would remain untokenized, though the two infrastructures would be synchronized through a hash mechanism.
A third alternative would tokenize central bank reserves and circulate settlement tokens completely backed by those deposits. According to the presentation, these tokens represent private liabilities rather than direct obligations of the central bank.
Schnabel additionally discussed how a blockchain-based financial network could maintain the traditional two-tier framework existing today. Central bank money would stay at the center of clearing and settlement, while commercial lenders would persist in offering funds and financial services to end users.
Such an architecture would position central bank money on DLT frameworks right beside tokenized financial assets, such as securities, bank deposits, and stablecoins.
Total stablecoin supply. Image: The Block.
UK financial institutions on tokenization
The ECB’s proposed framework emerges as banking institutions intensify their attention on tokenization. Approximately 71% of executive leaders within major British financial companies believe tokenization will transform financial services, according to findings from Lloyds’ 10th annual Financial Institutions Sentiment Survey provided to The Block.
Accelerated transactions and settlement were highlighted as the primary advantage by 60% of surveyed participants, with collateral and liquidity optimization following closely at 41%. Furthermore, 77% indicated that allocating capital toward novel and emerging technologies is a strategic growth focus, rising from 41% recorded in 2025.
“The real opportunity is to make financial markets work faster, more efficiently and with greater flexibility for clients,” Rob Hale, co-head of global markets at Lloyds, said. He cited faster settlement, more efficient use of collateral, and better movement of liquidity as tangible benefits.
Regarding the ECB’s perspective, Schnabel noted that tokenization can enhance the programmability and atomicity of financial transactions, enabling the simultaneous transfer of an asset and its corresponding payment. Tokenized infrastructure could additionally enable financial instruments and currency to communicate seamlessly across identical or linked DLT networks.
The ECB has already commenced testing this blueprint in reality. Its Pontes initiative debuted last month to deliver tokenized central bank currency for DLT-based operations, whereas its Appia initiative is evaluating various structural designs for tokenized financial markets.
Appia is currently reviewing a single unified ledger, bridged networks, and multiple collaborative ledgers.
Originally published at https://www.theblock.co/news/regulation/2026-10-02-ecb-outlines-three-models-for-putting-central-bank-money-onchain-417552.
