ECB Proposes Direct Blockchain Issuance of the Euro, Questions Role of Stablecoins

At the Jackson Hole symposium, ECB Executive Board member Isabel Schnabel outlined the central bank’s plan to issue euros directly on a blockchain. She emphasized that tokenized markets require an asset only a central bank can create and positioned stablecoins as complementary to, not replacements for, central‑bank money.

Why Stablecoins Are Not Seen as Settlement Money

Schnabel acknowledged that stablecoins can be designed to be very safe, but highlighted a key limitation: in a panic, only a central bank can create additional liquidity instantly. She referenced the 1907 banking panic, where money was tied to banks’ government‑bond holdings and could not expand, a problem later solved by the Federal Reserve Act of 1913.

Current Stablecoin Landscape in Europe

Data from DeFiLlama shows that dollar‑pegged stablecoins have a circulating supply of about $304 billion, while euro‑pegged tokens hold under $1 billion, indicating a significant gap in stablecoin adoption within the eurozone.

Upcoming ECB Initiatives

The ECB’s Pontes project is scheduled to go live in September 2026, linking the TARGET Services settlement backbone to blockchain platforms for atomic settlement in central‑bank money. Tests conducted between May and November 2024 involved 64 institutions across nine jurisdictions, settling nearly €1.6 billion in central‑bank money.

Schnabel evaluated three approaches for tokenizing euro reserves: direct issuance by the ECB, bridging from existing systems, or allowing a private firm to tokenize reserves via an omnibus account. She favored direct issuance to retain full control over monetary operations.

Implications for the Market

Other central bankers have expressed similar caution regarding stablecoins as settlement instruments. The ECB’s move toward a blockchain‑based euro could shape the future of 24/7, programmable, multi‑currency settlement in Europe.