ECB explores three models for tokenizing central bank money
The European Central Bank is exploring three ways to bring central bank money onto blockchain infrastructure. ECB Executive Board member Isabel Schnabel outlined the options at the Bank of England’s Future of Money conference in London.
According to the regulator’s presentation, the first option would involve the central bank issuing reserves directly on a programmable platform. Under the second model, the existing real-time gross settlement system would remain unchanged, while a separate interoperability layer would connect it with DLT platforms. The reserves themselves would not be tokenized, but the systems would be linked through cryptographic mechanisms.
The third option would involve tokenizing reserves held at the central bank and issuing settlement tokens fully backed by those reserves. However, such tokens would represent private claims rather than direct liabilities of the central bank.
Schnabel also explained how the current two-tier monetary system could be preserved. Central bank money would remain at the core of settlement, while commercial banks would continue to provide money and financial services to customers.
Under this model, central bank money could operate on DLT infrastructure alongside tokenized securities, deposits and stablecoins.
Tokenization is becoming a priority for banks
Interest in such infrastructure is also growing among major financial institutions. According to a Lloyds survey, 71% of senior decision-makers at the UK’s largest financial institutions expect tokenization to significantly reshape financial services.
Faster payments and settlement were cited as the main potential benefit by 60% of respondents. Another 41% pointed to more efficient collateral and liquidity management. At the same time, 77% said investment in new technologies had become a growth priority, up from 41% in 2025.
Lloyds believes tokenization can speed up settlement, improve the use of collateral and make it easier to move liquidity between market participants.
Schnabel also noted that tokenized infrastructure can make financial transactions programmable and atomic. This means the transfer of an asset and the payment for it can happen at the same time, while money and financial instruments can interact directly on the same or connected DLT networks.
The ECB has already begun testing these approaches in practice. Last month, it launched the Pontes project, which is intended to support the use of tokenized central bank money for DLT-based transactions. Another project, Appia, is exploring different architectures for tokenized markets, including a unified ledger, interconnected networks and multiple shared ledgers.
The digital euro remains a separate project
In parallel, the ECB continues to work on the digital euro, which is intended primarily for everyday payments by consumers and businesses rather than for interbank settlement. The preparation phase ended in October 2025, after which the ECB moved on to technical preparations, work with market participants and support for the legislative process.
The project is now at the pilot-preparation stage. The ECB has already selected 36 payment service providers, while the pilot itself is expected to begin in the second half of 2027 and run for 12 months. If the necessary legislation is adopted in 2026, the ECB expects to be ready for a possible digital euro launch in 2029.
Earlier, the ECB advanced its digital euro strategy for the European payments market.
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