Major Banks Join Forces to Explore Issuance of Digital Money

On Friday, ten major banks, including Santander, BNP Paribas, Bank of America, UBS, Deutsche Bank and Citi, announced they are joining forces to explore issuing a “1:1 reserve-backed form of digital money” on public blockchains, initially focused on G7 currencies.

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Louis Tellier & Maximilian Vargas
October 16, 2025

It’s earnings season, and we went digging through transcripts to see what leading institutions are saying about digital assets. Two remarks stood out:

  • Citi: CEO Jane Fraser highlighted tokenized deposits as the preferred model for institutional, cross-border, multi-bank payments. Demand is growing, but most treasury teams aren’t ready yet for a 24/7 environment.

  • BlackRock: Larry Fink reiterated the firm’s commitment to the tokenization of all assets. After tokenizing a money market fund, BlackRock is now exploring the tokenization of its iShares complex (we published some thoughts here).

Speaking of tokenization: that will be the focus of our Industry Call next Tuesday, featuring presentations from Galaxy, 21X, and the Stellar Foundation. It’s the kind of lineup that’s right down Larry’s alley. We think you’ll like it too.

Today, we’ll also talk about:

  • Major banks join forces to explore issuance of digital money

  • Banque de France and Euroclear to tokenize short-term debt

  • Coinbase hires former Bitstamp CEO to head Luxembourg unit

HIGH SIGNAL NEWS

ONCHAIN MONEY

Major Banks Join Forces to Explore Issuance of Digital Money

Consortium season: On Friday, ten major banks, including Santander, BNP Paribas, Bank of America, UBS, Deutsche Bank and Citi, announced they are joining forces to explore issuing a “1:1 reserve-backed form of digital money” on public blockchains, initially focused on G7 currencies.

  • Why it matters: The announcement follows closely on the heels of another consortium formed by ING, UniCredit, and DekaBank, which aims to launch a MiCA-compliant euro stablecoin by the second half of 2026. Though still far from operational, these initiatives highlight the growing focus among financial institutions on developing regulated forms of digital money that can complement existing payment and settlement infrastructures.

A sense of urgency is taking hold: According to our information, the recent wave of announcements is driven not only by regulatory progress but also by rising concern among banks about falling behind. On Monday, another of France’s largest banking groups decided internally to join the race, with a public announcement expected soon, according to people familiar with the matter.

  • “In Europe, banks are starting to accept that the CBDC promised for the end of 2026 won’t be ready. Yet the market can’t afford to wait any longer given the pace at which things are moving. Now that the first big banks have publicly announced their initiatives, nobody wants to be left behind,” a French banker told Blockstories.

Consortium vs. single issuance: The recent consortia announcements reflect both caution and strategy. For reputational and execution reasons, few banks are willing to launch stablecoins alone. Consortia allow them to experiment collectively while leveraging joint distribution networks. Still, as several experts interviewed by Blockstories warned, there’s a real risk of governance paralysis, given the number of participants and diverging interests involved.

  • Different levels of maturity: To mitigate such risks, the euro stablecoin consortium is already setting up a dedicated entity to define governance and push toward a launch in the second half of next year. The BNP Paribas- and Citi-led group, by contrast, remains at a much earlier exploratory stage.

The business-model question: Both groups still face key open questions, with commercial viability chief among them. Reflecting this uncertainty, the most recent announcement deliberately avoided the term “stablecoin,” instead referring to a “1:1 reserve-backed form of digital money.”

  • As one consortium participant told Blockstories: “We’re still uncertain about how to make a stablecoin commercially viable for the banking group. A big question mark is what kind of assets to invest reserves in, and what yield can realistically be generated long-term.”

Fractional reserve banking? One proposal under discussion envisions integrating stablecoin reserves into the traditional fractional-reserve banking framework, creating new revenue opportunities beyond holding liquid assets like T-bills. As Blockstories revealed last week, intense discussions on this topic have already begun within Paris Europlace, France’s leading financial lobby, which plans to formally request clarification from regulatory authorities.

Renewed focus on tokenized deposits: As questions over reserves and revenue models grow louder, attention is shifting to tokenized deposits as a possible solution. While their circulation is structurally more limited, they could allow banks to preserve fractional-reserve dynamics while operating on blockchain rails. Recent experiments by Sygnum, UBS, and PostFinance demonstrated cross-bank settlement, while several U.K. banks are also exploring interoperability solutions.

Varun Paul is the Senior Director of Financial Markets at Fireblocks. Prior to joining the digital asset infrastructure firm, he spent over 13 years at the Bank of England.

The GENIUS Act has pushed banks all around the world — especially in the U.S. — to move faster.

For mid-sized and smaller institutions, the challenge is acute: they are most exposed to deposit flight as users shift toward faster, more seamless digital options. Consortium models offer a defensive strategy. By pooling governance and capital, these banks can issue credible, regulated stablecoins collectively rather than being outcompeted individually by larger issuers.

Global players like J.P. Morgan, Citi, or HSBC, by contrast, can rely on tokenized deposits within closed networks, because their footprint is so large. They can enable cross-border transfers across their own balance sheets.

Longer term, the smartest banks will do both: stablecoins for public interoperability and tokenized deposits for yield and efficiency. But first, they must master receiving and managing others’ stablecoins, or risk losing clients to more agile competitors.

TOKENIZATION

Banque de France and Euroclear to Tokenize Europe’s $310 billion Short-Term Debt Market

Project Pythagore: On Monday, Banque de France and Euroclear announced a joint initiative to tokenize Negotiable European Commercial Paper (NEU CP), the Eurozone’s largest short-term debt market with $310 billion outstanding. The pilot is expected to launch by late 2026, aligning with Pontes, the first stage of the ECB’s wholesale CBDC project.

  • Why it matters: The initiative brings together two institutions central to how Europe’s financial markets function today. Banque de France oversees and regulates the NEU CP market, setting issuance conditions and supervising participants, while Euroclear operates one of the world’s largest securities settlement systems, responsible for settling over €1 quadrillion in securities transactions annually. Their shared goal is to use blockchain technology to modernize how short-term debt is issued, traded, and settled.

Starting with NEU CP: The NEU CP market was chosen as the starting point due to its simplicity, high liquidity, and standardized issuance processes.

  • “Tokenizing NEU CP should allow us to quantify the operational gains in automation, transparency, and speed, before extending the model to other instruments,” explained Alice Algot-Samé, Deputy Head of the Short- and Medium-Term Securities Division at Banque de France, to Blockstories. “With short maturities, a standardized process, and high frequency of emissions, it provides the ideal ground to compare the current setup with a tokenized one,” she added.

Addressing existing frictions: While the NEU CP market is already highly efficient, several manual steps still create operational friction.

  • “Today, the process remains largely manual, with risks of errors and duplicates in the reporting. The idea behind using blockchain is to streamline the process to ensure data reliability,” noted Algot-Samé.

How it works: Project Pythagore will connect the Banque de France’s blockchain infrastructure with D-FMI, Euroclear’s tokenization platform. Through smart contracts, issuers can natively issue and manage digital securities onchain, while buyers settle in central bank money via the Pontes wholesale CBDC platform, enabling atomic delivery-versus-payment (DvP) to eliminate settlement risk and increase efficiency. According to our information, the Banque de France’s blockchain is set to form the core of the Pontes infrastructure.

Looking ahead: While the initial pilot will be conducted in a fully regulated, permissioned environment, the design is intentionally DLT-agnostic, leaving the door open to future interoperability with public blockchains.

  • “Our setup is intentionally cautious and fully regulated, but the Pontes solution itself is DLT-agnostic. If, in the future, public networks are approved by the Eurosystem, nothing would prevent us from connecting to them,” concluded Timothée Fluteau, Deputy Head of Innovation and Market Infrastructures at Banque de France.

Stéphanie Lheureux leads the development of Euroclear’s digital assets division. We asked her how Project Pythagore fits into Euroclear’s bigger tokenization strategy.

For Euroclear, this project is an ambitious initiative to modernize the NEUCP market, the largest short-term debt market in the eurozone. The goal is not only to modernize existing processes but also to demonstrate the value of tokenization with the short-term market in order to consider a full migration to DLT and increase the range of Issuers.

A pilot involving established institutions will test the benefits while ensuring interoperability with existing systems. Over time, streamlined operations, atomic settlement, and 24/7 availability are expected to lower barriers to entry and attract new participants — including MiCA-regulated digital asset firms — alongside traditional players.

Trials are planned in 2026, with the objective of aligning with the Pontes pilot phase in the same year, enabling delivery-versus-payment in central bank money within a fully operational environment.

A conversation with Jean-Baptiste Graftieaux, newly appointed CEO of Coinbase in Luxembourg, where the exchange obtained its MiCA license last June. The former Bitstamp CEO shares his priorities for the months ahead.

  1. Digital Assets and Emerging Technologies: The 2025 Outlook (State Street × Oxford Economics) — A global survey of 300+ institutional investors revealing how hybrid TradFi/DeFi models, blockchain, and AI are reshaping digital-asset strategies and the future of finance.

  2. An Investor’s Guide to Bitcoin & Altcoin Treasury Companies (MarketVector) — An analysis of Digital Asset Treasuries, showing how listed firms use crypto exposure and capital leverage to boost returns, and the structural risks that follow.

  3. The Compelling Case for Crypto (Franklin Templeton) — A report outlining why digital assets are entering the mainstream, driven by diversification benefits, institutional adoption, and new regulated investment products.

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Disclaimer: The information provided in the Institutional Briefing by Blockstories does not constitute investment advice. Accordingly, we assume no liability for any investment decisions made based on the content presented herein.

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