This does not concern a retail digital euro, but rather wholesale settlements — funds that commercial banks hold in accounts with the ECB and use to make payments to one another, writes forklog.com.
Three models
Schnabel first described these options in detail in an August speech at a symposium in Jackson Hole. There, she analysed an article by economist Darrell Duffy.
The first involves the direct issuance of tokenised reserves on a programmable platform. In this case, the money exists directly on the distributed ledger and remains a direct liability of the regulator.
According to Schnabel, this is the only way the ECB will be able to conduct monetary policy directly on the blockchain and automate repo transactions, collateral management and liquidity provision using smart contracts.
The second approach retains the real-time gross settlement (RTGS) system and links it to DLT platforms. Reserves remain outside the blockchain.
For example, a security is transferred to the buyer on the DLT, whilst the cash settlement takes place within the ECB’s traditional infrastructure.
The third option involves the participation of a private intermediary. Banks deposit funds into the intermediary’s omnibus account at the ECB, and the intermediary issues settlement tokens in the register on a 1:1 basis. Legally, such tokens remain the liability of the intermediary and depend on its operational, financial and legal stability.
“Central banks must adopt DLT and go on-chain themselves,” she stated in August.
According to Schnabel, the native tokenisation of reserves will allow central bank money to remain the ultimate risk-free settlement asset whilst benefiting from the programmability of the new infrastructure.
Pontes has already been launched
The Eurosystem is already implementing part of this concept through Pontes. The solution was launched on 21 September to facilitate settlements for transactions involving tokenised assets denominated in central bank money.
Pontes acts as a bridge between market-based DLT platforms and TARGET Services, linking them to the Eurosystem’s own DLT infrastructure.
Initially, settlements take place via TARGET2 or a distributed ledger. The ECB plans to introduce round-the-clock operation and programmability at a later stage.
Banks and infrastructure operators, including Deutsche Bank, Santander, Société Générale and Clearstream, have already connected to the system. Pontes’ functionality will be expanded in stages, with full implementation expected by 2028.
In parallel, the Eurosystem is developing the Appia project, which focuses on the long-term architecture of Europe’s tokenised financial market. Options include:
– a single, shared register;
– a network of interconnected platforms;
– several shared DLT networks.
The project concept is scheduled to be finalised by 2028.
Should Moldova join the EU, the National Bank of Moldova will have to participate in these scenarios.
This story was translated with the assistance of artificial intelligence.The translation was also reviewed by the Logos Press editorial team.
Follow our updates
Have information for the newsroom? Share it with Logos-Press
Comments
0No comments yet. You can start the conversation.
Comments are open to readers with a Logos Press account.
Sign in to comment