Bank of Spain, Cecabank, Abanca, and Adhara Blockchain collaborate on CBDC tests

Banco de España, Spain’s central bank, has disclosed its chosen collaborators for the testing phase of the central bank digital currency (CBDC) initiative, a year after issuing a call for collaboration. Out of the 24 applications received in the past year, the Bank of Spain has selected three partners: Cecabank, Abanca, and Adhara Blockchain, with the collaboration set for a six-month pilot of the wholesale CBDC. Notably, Cecabank and Abanca are Spanish entities, while Adhara Blockchain is headquartered in the United Kingdom.

The testing phase aims to simulate the processing and settlement of interbank payments using a single tokenized wholesale CBDC. Additionally, it will explore the exchange of various wholesale CBDCs issued by different central banks. As part of the experiment, the consortium of Cecabank and Abanca will employ the wholesale CBDC to settle a simulated tokenized bond.

It is crucial to distinguish the Spanish CBDC program from the digital euro project, which would extend its coverage to all economies in the eurozone if implemented. Spain has been actively engaged in the cryptocurrency market, making recent efforts to implement the European Union’s Markets in Crypto-Assets Regulation (MiCAR) and providing insights into the characteristics and potential applications of the digital euro.

The European Central Bank (ECB) and the Bank of Spain are persistently advancing their efforts on the development of the digital euro. Emphasizing the advantages of digitalization in payments and the broader economy, both institutions underscore the ongoing work to explore and potentially implement a digital euro. This initiative aligns with the broader trend of central banks globally exploring digital currencies as a means to enhance efficiency, security, and accessibility in the financial system.

In October, the Bank of Spain issued a comprehensive statement elucidating the features and applications of the digital euro. The bank asserted that the constraints of physical cash impede the harnessing of benefits presented by the increasing digitization of the economy and society. The digital euro is poised to assume a pivotal role in seamlessly integrating electronic payments into the financial system.

Simultaneously, the European Central Bank (ECB) provided a link to a dedicated landing page furnishing crucial insights about the digital euro, pledging a commitment to a “simpler life” and a “stronger Europe.”

During that same month, the ECB’s governing council initiated the “preparation phase” for the digital euro project, slated to span two years. This phase is dedicated to finalizing regulatory frameworks for the digital currency and selecting potential issuers, with the preparation phase anticipated to culminate by 2025. Nevertheless, a definitive decision on issuing a pan-EU Central Bank Digital Currency (CBDC) is still pending.

Despite notable regulatory strides, recent surveys conducted by the Bank of Spain indicate a subdued enthusiasm for the digital euro among the Spanish populace. Only 20% of respondents expressed a willingness to seamlessly integrate the pan-European CBDC into their regular payment methods, while a substantial majority of 65% exhibited a degree of reluctance. This raises pertinent questions regarding the widespread acceptance of CBDCs within the Spanish financial landscape.

The cryptocurrency terrain in Spain has undergone substantial transformations, marked by discernible shifts in adoption trends, regulatory frameworks, and technological advancements. The tally of officially registered cryptocurrency companies operating in Spain witnessed a substantial uptick of approximately 56% in 2023, encompassing both domestic and international platforms licensed as virtual asset service providers.

On a global scale, deliberations surrounding Central Bank Digital Currencies (CBDCs) endure, with Russia gearing up to inaugurate the first CBDC pilot involving 13 banks and real customers. Central banks across the globe actively explore CBDCs, indicating pivotal strides in the dynamic realm of stablecoin projects.

While Spain’s active engagement in CBDCs showcases proactive initiative, the backdrop of public skepticism and the unfolding narrative of global CBDC explorations underscore the multifaceted challenges inherent in the continually evolving landscape of digital currencies.

Raksha

Raksha, a seasoned journalist, specializes in crafting insightful narratives on blockchain and AI developments. With a keen eye for innovation, she distills complex topics into accessible stories, providing readers with a clear understanding of the dynamic intersection between these transformative technologies.