The European Central Bank (ECB) wants to issue euros directly onto a blockchain. Executive Board member Isabel Schnabel made that case at the Jackson Hole symposium on Friday, and she was very clear about stablecoins.
She is talking about money that banks use to settle with each other, not the euros in your account. Tokenized markets, she argued, need an asset only a central bank can create.
Why Schnabel Rejects Stablecoins as Settlement Money
A stablecoin can be built to be almost perfectly safe, and Schnabel accepts that. Her objection is about what happens next.
In a panic, everyone wants cash at once. A central bank can create more of it. A stablecoin issuer cannot.
Her precedent is the banking panic of 1907. Money was tied to banks’ holdings of government bonds, so the money supply could not expand. The Federal Reserve Act of 1913 fixed that.
“Stablecoins are best understood as complements to central bank money, not substitutes for it,” read an excerpt in her speech.
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The supply numbers explain Europe’s hurry. Dollar-pegged stablecoins circulate about $304 billion, DefiLlama data shows. Euro-pegged tokens hold under $1 billion.
If private tokens win settlement, Europe settles in dollars. Crypto only entered the Fed’s Jackson Hole agenda this year. Other central bankers have voiced similar warnings about stablecoins.
Pontes Launch Puts ECB Money on a Ledger
Pontes goes live next month, linking TARGET Services, the eurozone’s settlement backbone, to market blockchain platforms.
The pipes have been tested before, particularly from May to November 2024, when 64 institutions across nine jurisdictions ran 58 use cases. They settled nearly €1.6 billion in central bank money.
Cash finality remains within TARGET2 initially. Smart contracts and round-the-clock operation come later.
Schnabel weighed three routes:
- Issue tokens directly
- Bridge from today’s systems, or
- Let a private firm tokenize reserves through an omnibus account.
She wants the first, while the other two leave the ECB watching from outside, unable to run repo operations in code.
A second project, Appia, is still deciding whether Europe needs one shared ledger or several. She cited France’s Lise, holder of Europe’s first tokenized exchange license, as evidence that tokenization opens markets to smaller firms.
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