ECB's Schnabel Argues Central Banks Must Go On-Chain for Tokenised Finance
Key points
- Schnabel, speaking at Jackson Hole on 28 August 2026, argued that central banks should go on-chain themselves rather than remaining outside DLT platforms via intermediaries or bridges.
- She concluded that stablecoins are dominated by central-bank-money settlement solutions, citing the unique capacity of central banks to provide liquidity elastically as the key differentiator.
- The speech identifies a structural trade-off: a unified or small number of large shared ledgers reduces interoperability and fragmentation issues but creates challenges for resilience, innovation, and governance.
- Existing Eurosystem infrastructure, specifically TARGET2-Securities and its auto-collateralisation mechanism, is cited as a baseline from which tokenisation's general-purpose programmability would represent a material upgrade.
- Bringing central bank reserves on-chain is framed as an opportunity to modernise monetary policy implementation, collateral management, and liquidity provision, not merely to preserve the settlement status quo.
At the Jackson Hole Economic Policy Symposium on 28 August 2026, Isabel Schnabel, a member of the European Central Bank‘s Executive Board, made the case that central banks should embed themselves directly into distributed ledger technology (DLT) platforms rather than remaining on the periphery through intermediaries or bridge solutions. Her remarks, delivered as a discussion of a paper by Darrell Duffie, positioned central bank money as irreplaceable in tokenised wholesale finance and urged the Eurosystem to extend that role into programmable infrastructure.
Schnabel’s core argument runs on three tracks. First, stablecoins cannot displace central bank money as a safe settlement asset because central banks retain a unique capacity to provide liquidity elastically, a conclusion she describes as consistent with Duffie’s own analysis. Second, keeping central bank reserves off DLT platforms, whether through private intermediaries or technical bridges, is insufficient; reserves themselves should become native programmable assets. Third, the structural question of whether to pursue a single shared ledger or a central bank-operated ledger that connects outward involves a genuine trade-off between reducing fragmentation on one side and preserving resilience, innovation, and governance integrity on the other.
The speech draws on live euro area work to ground its claims, pointing to the Eurosystem’s TARGET2-Securities (T2S) platform as an existing example of delivery-versus-payment atomicity and auto-collateralisation. Tokenisation, in Schnabel’s framing, makes such programmability general-purpose rather than infrastructure-specific, which is where the broader systemic opportunity lies. She argues that bringing reserves on-chain would allow central banks to modernise monetary policy implementation, collateral management, and liquidity provision, with downstream benefits for financial stability.
For operators in wholesale markets, the significance is less any immediate operational change and more the directional signal from a senior ECB policymaker at a venue with global reach: euro area central bank engagement with DLT is being framed not as an experiment but as a strategic necessity, and the architecture debate (unified ledger versus connected central bank ledger) is now formally on the table at the highest policy level.