ECB Maps Three Routes for Central-Bank Money Onchain

The ECB has outlined three architectures for bringing central-bank settlement money onto tokenized markets while preserving commercial banks' role.

Key points

The ECB presented direct issuance, bridging and private-intermediary models for bringing central-bank settlement money onto tokenized infrastructure.
The approaches differ over whether reserves are tokenized, remain in the existing RTGS system or back privately issued settlement tokens.
The framework is exploratory rather than a final policy choice, while the ECB's Pontes and Appia projects test near- and longer-term architectures.

The European Central Bank has set out three possible architectures for using central-bank money to settle transactions involving tokenized securities, deposits and stablecoins. Isabel Schnabel, a member of the ECB's Executive Board, presented the framework at the Bank of England's Future of Money conference in London on October 1. The options range from issuing reserves directly on a programmable platform to connecting existing payment rails with distributed ledgers or relying on a regulated private intermediary. The ECB did not select a winner, making the presentation a design map rather than a final policy decision.

Direct issuance would place reserves on a programmable platform

Under the first model, a central bank would issue reserves natively on a programmable platform. Tokenized central-bank money could then settle digital securities or other financial claims on the same infrastructure. The ECB presentation argues that tokenization can make settlement programmable and atomic, meaning payment and asset-transfer legs either complete together or do not complete at all. Direct issuance offers the closest link between the central bank and the ledger, but it would also require the central bank to operate or participate directly in new technical infrastructure.

A bridge could keep reserves in the existing RTGS system

The second approach would leave reserves inside the conventional real-time gross settlement system and connect it to distributed-ledger platforms through an interoperability layer. A trigger and cryptographic hash-link would coordinate the two systems while the reserves themselves remained offchain. This model aims to extend central-bank settlement to tokenized markets without replacing the core payment infrastructure. It may reduce the scale of immediate technical change, although the reliability and timing of the connection become critical because settlement activity spans two different environments.

A private intermediary could issue reserve-backed settlement tokens

In the third model, a private intermediary would hold reserves at the central bank and issue settlement tokens fully backed by those balances. The token would be a private claim rather than a direct claim on the central bank. That distinction affects governance, legal rights and operational risk even when backing remains one-for-one. Schnabel's framework keeps the familiar two-tier monetary structure in view: central-bank money anchors settlement, while commercial banks and other regulated firms continue providing customer-facing money and financial services.

Pontes and Appia put parts of the framework into practice

The ECB is already testing elements of these designs. Pontes launched on September 21 with a dual settlement model that can use either TARGET2 or Eurosystem distributed-ledger infrastructure for transactions in tokenized assets. The presentation lists 24-hour availability and decentralized programmability as planned enhancements. A separate project, Appia, is examining three broader market structures: one unified ledger, interconnected networks, and multiple shared ledgers. These projects address wholesale settlement and are distinct from the ECB's separate retail digital-euro work.

The unresolved choice is about control, interoperability and risk

Independent reporting by The Block confirmed the three-model framework and noted that central-bank money would sit alongside tokenized securities, deposits and stablecoins while preserving the two-tier system. Each route distributes control and risk differently. Direct issuance gives the central bank the closest operational role; bridging depends on coordination between legacy and ledger systems; and the intermediary model introduces a private claim backed by reserves. The presentation shows that the ECB wants central-bank money to remain the settlement anchor as tokenized markets expand, but standards, legal treatment and the preferred architecture remain open.

Sources

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