Spain Joins List of Nations Experimenting with CBDCs, Plans ‘Wholesale’ Twist

Wholesale CBDCs allow the banks issuing them, to hold reserves with a central bank.

Written by Radhika Parashar, Edited by Siddharth Suvarna | Updated: 8 December 2022 15:46 IST

Spain Joins List of Nations Experimenting with CBDCs, Plans ‘Wholesale’ Twist

Photo Credit: Pixabay/ Efraimstochter

CBDCs are the representation of any fiat currency, on a blockchain network

Highlights

Spain has not announced any dates around its test plans
Interested fintech firms can participate in the trials
Bank of Spain wishes to examine alignment of CBDC with present system

The Bank of Spain (BDE) has expressed its intentions of launching a test programme soon, that would examine the use cases of wholesale CBDC. The central bank has asked for proposals of collaborations from local fintech organisations that could potentially help the authorities conduct detailed examinations on its future CBDC. The list of nations, experimenting with their respective blockchain-based digital money, has been growing in recent times. Spain is the latest country to have joined this list.

CBDCs or central bank digital currencies are the representation of any fiat currency, on a blockchain network. Wholesale CBDCs allow the banks issuing them, to hold reserves with a central bank. This form of a CBDC is majorly used by financial institutions, rather than by the public for day-to-day use cases.

The BDE has named three points of focus for the text of Spain's CBDC trials. These are — triggering the movement of funds, checking the use of the CBDC in facilitating liquidation of finances, and examining the pros and cons of introducing a wholesale CBDC, CoinTelegraph said in a report.

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The BDE has clarified that this test is its ‘exclusive' undertaking while the European Union (EU) continues with its own research and development around blockchain or crypto trials.

The results of this project will add to the internal research that the BDE is conducting around digital currencies. The aim is to find out if CBDCs can improve the existing digital economy systems.

Companies interested in participating with the BDE in this test are required to submit details on how they want to contribute by January 31, 2023.

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While nations like Jamaica and Nigeria have already rolled-out their CBDCs, countries like India, China, Pakistan, and Japan are working briskly in testing their respective CBDCs.

It is however noteworthy, that Spain is the only nation that is testing a wholesale CBDC, that would be useful for the banks as opposed to traditional CBDCs, that trade for commercial purposes.

Transactions through CBDCs are expected to make the process faster while also keeping all blockchain-stored records, transparent and unalterable.

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Further reading: Cryptocurrency, CBDC, Spain, Wholesale CBDC

Radhika Parashar

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Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More