European Central Bank Executive Board member Isabel Schnabel has called for central banks to make reserves available as native programmable assets on distributed ledgers, arguing that stablecoins cannot replace central bank money as the ultimate settlement asset. Her remarks came as the Eurosystem prepares to launch the first version of its Pontes wholesale settlement service in September.
In an August 28 speech at the Jackson Hole Economic Policy Symposium, Schnabel said central banks should ‘embrace DLT and go on-chain themselves.’ She framed the case around wholesale tokenised finance rather than retail payments: central bank money would continue to anchor settlement while programmable infrastructure could support atomic transactions, collateral management and liquidity provision.
Pontes starts with a dual settlement model
Pontes is designed to connect market-operated distributed-ledger platforms with TARGET Services, the Eurosystem’s existing payment infrastructure. The ECB’s project page describes a dual model in which participants can use cash tokens on a Eurosystem DLT platform or settle through T2, its real-time gross settlement system.
The initial release remains an incremental step rather than a wholesale migration of central bank reserves onto a new ledger. Schnabel said legal settlement finality for the cash leg will initially remain anchored in T2. The ECB plans eventually to place finality on its own DLT platform, while smart-contract functionality and 24/7 operations are listed as later additions.
The ECB says entities with access to T2 can participate in the initial launch. Eligible market DLT operators include authorised central securities depositories, operators under the EU DLT Pilot Regime, overseen payment-system operators, authorised central counterparties and certain regulated financial institutions that meet the stated conditions.
Stablecoins cast as complements, not settlement anchors
Schnabel’s argument draws a clear line between payment choice and the settlement foundation of the financial system. She said appropriately designed and regulated stablecoins can expand the payment instruments available to households and businesses, but characterised them as complements to central bank money rather than substitutes.
Her reasoning is that even a conservatively backed stablecoin issuer cannot create liquidity elastically during market stress. Central banks, by contrast, can expand the supply of reserves and therefore support settlement when confidence or market funding deteriorates. This is a policy argument made by Schnabel, not evidence that every existing stablecoin has the same risk profile.
For payment and digital-asset providers, the practical distinction is important. Pontes is aimed at DLT-based wholesale transactions in central bank money; it is not a new retail CBDC, a general-purpose stablecoin rail or proof that tokenised securities have moved onto one unified European ledger.
Architecture remains open under Project Appia
The longer-term design is still being explored through Project Appia. Options described by Schnabel include a unified ledger holding central bank money, commercial bank money and financial assets; a Eurosystem-operated reserve ledger connected to private DLT networks; or multiple interoperable ledgers.
A unified system could reduce fragmentation and make atomic settlement easier because cash and assets would be validated on the same infrastructure. Schnabel also acknowledged the trade-offs: a single ledger could concentrate operational risk, complicate governance and create technology lock-in, while a multi-ledger model introduces interoperability and liquidity-management challenges.
That leaves the September Pontes launch as an operational bridge toward a still-unsettled architecture. Providers should treat the first release as infrastructure for eligible wholesale participants, with finality initially dependent on T2 and more advanced programmability to follow. The ECB’s direction is clearer than the final design: it wants central bank money to remain the settlement anchor as tokenised markets develop, but the balance between a common ledger and interoperable networks has not yet been decided.