ECB Unveils Three Models for Putting Central Bank Money Onchain

ECB presents three paths for onchain central bank money

The European Central Bank has proposed three models for bringing central bank money onto digital ledger technology (DLT), also known as blockchain networks. ECB Board member Isabel Schnabel presented the framework on Thursday at the Bank of England's Future of Money conference in London.

Digital ledger technology is a system for recording transactions across multiple computers so that no single record can be altered after it is added. The ECB's models aim to place central bank money alongside tokenized financial assets, including securities, deposits, and stablecoins.

Key details of the three models

• Direct issuance: The central bank would issue reserves directly on a programmable platform.
• Interoperability layer: The ECB's existing real-time gross settlement system would remain in place, connected to DLT platforms by a hash-linked interface. The reserves themselves would not be tokenized.
• Tokenized reserves: Reserves held at the central bank would be tokenized, and settlement tokens fully backed by those reserves would be issued. Those tokens would be private claims rather than direct claims from the central bank.

In all three models, the ECB plans to retain the two-tier monetary system. Central bank money would remain at the core of settlement, while commercial banks would continue to provide money and financial services to customers.

What the ECB's presentation says

According to Schnabel's presentation, tokenization can make financial transactions more programmable and atomic, allowing the transfer of an asset and its payment to occur together. Tokenized infrastructure could also allow financial assets and money to interact directly on the same or connected DLT networks.

UK institutions are already looking ahead

The ECB's framework comes as financial institutions increase their focus on tokenization. According to Lloyds' 10th annual Financial Institutions Sentiment Survey, 71% of senior decision-makers at the UK's largest financial institutions expect tokenization to reshape financial services.

Faster payments and settlement were cited as the biggest potential benefit by 60% of respondents, followed by collateral and liquidity management at 41%. Investment in new and emerging technologies was named a growth priority by 77% of respondents, up from 41% in 2025.

Rob Hale, co-head of global markets at Lloyds, said: "The real opportunity is to make financial markets work faster, more efficiently and with greater flexibility for clients," citing faster settlement, more efficient use of collateral, and better movement of liquidity.

ECB's ongoing projects

The ECB has already begun putting its framework into practice. Its Pontes project launched last month to provide tokenized central bank money for DLT-based transactions. Meanwhile, its Appia project is examining different architectures for tokenized markets, considering a unified ledger, interconnected networks, and multiple shared ledgers.

Why this matters for the future of finance

The ECB's move signals that a major central bank is seriously exploring how to integrate its money into blockchain-based systems. If implemented, any of the three models could allow central bank money to settle transactions instantly on programmable networks, potentially reducing reliance on slower traditional payment rails. The continued focus on preserving the two-tier system suggests the ECB intends to keep commercial banks involved rather than replacing them.

What remains unclear

The ECB has not yet chosen which of the three models it will ultimately pursue. No timeline has been announced for a final decision or full deployment. It is also unconfirmed whether other central banks are pursuing similar frameworks.

Sources

• The Block