- Isabel Schnabel wants central-bank reserves available directly on programmable financial infrastructure.
- Pontes starts the operational transition in September, while Appia will define the longer-term European architecture.
- Onchain reserves could automate collateral, liquidity provision and parts of monetary-policy implementation.
- The ECB has not decided whether Europe ultimately needs one shared ledger or several interoperable networks.
European Central Bank Executive Board member Isabel Schnabel wants central banks to put reserves onchain as tokenized finance expands, arguing at Jackson Hole on August 28 that programmable central-bank money could improve settlement, collateral management and monetary-policy implementation. The proposal is moving toward implementation in Europe, with the Eurosystem preparing Pontes for September while a 61-member industry group begins work on the longer-term Appia framework.
Why the ECB wants reserves onchain
Tokenization allows securities and money to exist as programmable digital assets, but many emerging DLT markets still depend on conventional infrastructure when transactions reach the cash-settlement stage.
That separation weakens one of tokenization’s main advantages.
If a security changes ownership on one ledger while payment settles elsewhere, the two legs must be synchronized. Schnabel argued that bringing central-bank reserves onto programmable infrastructure would allow cash and securities to exchange together, reducing settlement risk while preserving central-bank money as the ultimate settlement asset.
The concept is particularly important for wholesale markets. Central-bank reserves are already used to settle obligations between financial institutions. The proposed change concerns the technological infrastructure on which those reserves can operate, not the creation of a new retail currency.
Schnabel’s position is therefore more ambitious than simply allowing blockchain-based markets to connect to existing payment systems. The ECB wants to determine whether central-bank money itself can eventually function natively within tokenized finance.
Pontes and Appia split the transition into two stages
The Eurosystem is pursuing that objective through two connected projects with different time horizons.
Pontes is the immediate step. Starting in September, it will connect DLT-based market platforms with TARGET Services, allowing tokenized transactions to use existing central-bank settlement infrastructure.
Appia addresses what comes afterward. Its planned 2028 blueprint will define the architecture and standards for a broader European tokenized wholesale market. The ECB has not yet selected the final model.
The Eurosystem has already selected 61 financial-market stakeholders and public-sector institutions for the Appia contact group. Work begins in September, covering Pontes user requirements, risk management and technical development alongside the longer-term design of Europe’s tokenized financial ecosystem.
That means September marks two milestones at once: Pontes moves the strategy toward live infrastructure, while market participants begin helping the ECB decide what should eventually replace or extend that bridge.
Smart contracts could change central-bank operations
Schnabel sees potential uses beyond securities settlement.
Central banks currently provide liquidity against eligible collateral through processes involving multiple systems, instructions and operational steps. Programmable reserves could compress some of those functions into transactions executed automatically when predefined conditions are met.
A repo operation, for example, could exchange central-bank liquidity and collateral atomically. Smart contracts could also automate collateral calls or substitutions and apply different remuneration conditions to balances.
That could become more important as private financial markets themselves accelerate.
Tokenized collateral can move around the clock. Smart contracts can trigger margin requirements automatically.
More frequent settlement can increase intraday liquidity needs rather than waiting for traditional end-of-day processes.
Central banks therefore face an operational question: if financial markets begin responding to stress in seconds, should liquidity facilities remain dependent on infrastructure designed around slower settlement cycles?
Schnabel’s answer is that the central-bank side of the system needs to evolve as well.
One ledger or several remains the harder question
Moving central-bank money onto DLT does not determine what the network itself should look like.
The ECB is considering several architectures.
One is a unified ledger, where central-bank money, commercial-bank money and financial assets operate on common infrastructure. Keeping the different components together can make atomic settlement easier and reduce the need for cross-network messaging.
Another model would place central-bank reserves on a Eurosystem-controlled ledger that connects with privately operated DLT platforms.
A more decentralized option would rely on multiple interoperable networks, potentially allowing assets and central-bank money to exist across different infrastructures.
The trade-off is between integration and flexibility.
A unified system can reduce fragmentation but places greater importance on common governance and technical standards. Multiple networks leave more room for private infrastructure and experimentation, but every connection introduces synchronization, messaging and operational dependencies.
Schnabel noted that when central-bank money sits on a separate ledger, smart contracts need reliable information from another network to complete settlement. That can weaken atomicity, one of the principal technical advantages promised by tokenization.
Appia’s 2028 blueprint is intended to resolve precisely these questions rather than merely determine whether the ECB should use DLT at all.
Tokenization could tackle Europe’s fragmented capital markets
Europe has another incentive that extends beyond technological modernization.
Its capital markets remain divided across national systems and infrastructures. Tokenization creates an opportunity to build common transaction and settlement standards without reproducing every legacy layer separately.
Schnabel argued that this could support greater European financial integration.
The response from financial institutions suggests the issue has moved beyond a niche central-bank experiment.
An ECB consultation on Appia received 127 responses from financial-services participants, with the central bank describing feedback as broadly constructive and reporting significant interest in participating in implementation.
The 61-member contact group now gives banks, market infrastructures and public institutions a direct role in shaping the system.
For the ECB, that makes tokenization partly an infrastructure policy. A common framework could reduce the technological fragmentation that mirrors Europe’s existing market fragmentation while keeping settlement anchored to the euro rather than privately issued digital money.
Schnabel’s argument complements the BIS stablecoin warning
Her Jackson Hole speech also provides the central-bank layer missing from the stablecoin debate.
At the same symposium, BIS General Manager Pablo Hernández de Cos argued that stablecoins are not credible as a mainstream payment system at scale and identified tokenized bank deposits as a stronger model for everyday digital money.
Schnabel’s focus is wholesale settlement.
If commercial-bank deposits become programmable tokens, financial institutions still need a final asset for settling obligations among themselves. In the existing monetary system, that role belongs to central-bank reserves. Schnabel wants the same hierarchy to survive tokenization.
The resulting architecture would retain the traditional two-tier structure in a new technological form: commercial banks provide money to customers and markets, while the central bank supplies the settlement anchor underneath it.
Stablecoins could still operate alongside that structure, but they would compete with an increasingly programmable banking system rather than with today’s legacy payment rails.
That is the more consequential part of the ECB’s strategy. Pontes will test whether tokenized markets can connect efficiently to existing central-bank infrastructure from September. Appia has the harder task of determining whether Europe can eventually build a shared tokenized market in which central-bank money no longer needs that bridge at all.
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