European Central Bank Executive Board member Schnabel throws a heavy hammer at the Jackson Hole symposium: the central bank should “go on-chain”; stablecoins can’t support ultimate settlement.
She acknowledges the benefits of tokenization—atomic settlement, programmability—and says it can reduce settlement risk in cross-border repos while stitching together fragmented financial infrastructure in the euro area. But she draws a red line: stablecoins are a “supplementary payment instrument,” not a substitute for central bank reserves. When liquidity elasticity fails during stress periods, that alone is enough to rule it out.
The real answer is to tokenize central bank money itself. Schnabel argues that central banks should natively issue tokenized reserves on a distributed ledger for monetary policy, collateral management, and liquidity provision. The ECB is pushing ahead with Project Appia and the soon-to-launch Project Pontes, exploring syncing TARGET services with DLT to ultimately run through 7×24 central bank digital currency settlement.
In one sentence: stablecoins aren’t a threat—they’re a stepping stone. The real moat lies in the native tokenization of central bank money. When CBDC on-chain runs more securely and is more programmable than USDT, the market will provide the answer itself.
She acknowledges the benefits of tokenization—atomic settlement, programmability—and says it can reduce settlement risk in cross-border repos while stitching together fragmented financial infrastructure in the euro area. But she draws a red line: stablecoins are a “supplementary payment instrument,” not a substitute for central bank reserves. When liquidity elasticity fails during stress periods, that alone is enough to rule it out.
The real answer is to tokenize central bank money itself. Schnabel argues that central banks should natively issue tokenized reserves on a distributed ledger for monetary policy, collateral management, and liquidity provision. The ECB is pushing ahead with Project Appia and the soon-to-launch Project Pontes, exploring syncing TARGET services with DLT to ultimately run through 7×24 central bank digital currency settlement.
In one sentence: stablecoins aren’t a threat—they’re a stepping stone. The real moat lies in the native tokenization of central bank money. When CBDC on-chain runs more securely and is more programmable than USDT, the market will provide the answer itself.