What happened?
In an August 28 speech, ECB Executive Board member Isabel Schnabel argued that tokenised finance needs a native, programmable form of central bank money for settlement. She called for central banks to move on-chain so financial institutions can settle tokenised assets in the safest form of money while preserving the liquidity elasticity associated with central bank reserves.
How it works
Schnabel described central bank money issued directly on distributed ledger technology and transferred atomically with tokenised assets. Smart contracts could coordinate delivery-versus-payment and reduce the messaging, reconciliation and manual intervention needed when asset and cash legs sit on separate systems. She contrasted this native model with trigger and interoperability approaches that connect DLT platforms to existing payment rails.
Why it matters for payments
Her case rests on settlement safety and liquidity. Central bank reserves anchor the monetary system and can be supplied elastically when markets need liquidity, a function Schnabel said stablecoins cannot replace. She presented stablecoins as potential complements, while arguing that wholesale tokenised markets still need central bank money to retain singleness of money and reliable final settlement.
What to watch
Project Appia is still evaluating three architecture options for a longer-term Eurosystem approach. Project Pontes is further along, but Schnabel said its planned initial launch would keep legal finality for the cash leg in TARGET2. Native DLT finality is intended to follow, while smart contracts and round-the-clock operation are described as later features rather than capabilities already in production.