A year after issuing a collaboration call, the central bank of Spain, Banco de España, has now disclosed its chosen partners for the testing phase of the central bank digital currency (CBDC) initiative.
In a year, the Bank of Spain reviewed 24 submissions and selected three trusted allies. The Bank publicly announced its decision on January 3, revealing that it would enter into partnerships with Cecabank, Abanca, and Adhara Blockchain. These esteemed entities will join forces with the Bank for a six-month test pilot of the wholesale Central Bank Digital Currency (CBDC). While Cecabank and Abanca hail from Spain, Adhara Blockchain is proudly headquartered in the United Kingdom.
In the upcoming phase of testing, a simulation will be conducted to process and settle interbank payments. The focus will be on a sole tokenized wholesale CBDC, alongside exploring the exchange of diverse wholesale CBDCs issued by multiple central banks. As part of this experiment, Cecabank and Abanca, as a consortium, will utilize the wholesale CBDC to settle a simulated tokenized bond.
Please bear in mind that the Spanish CBDC program and the digital euro project are separate initiatives. While the Spanish CBDC program is specific to Spain, the digital euro project would encompass all economies within the eurozone, should it be implemented.
Spain has markedly embraced cryptocurrency, displaying a proactive approach by undertaking endeavors to enforce the European Union’s Markets in Crypto-Assets Regulation (MiCAR) and furnish comprehensive understandings regarding the traits and prospective utilities of the digital euro.
ECB and Bank of Spain Continue Work on Digital Euro, Emphasizing Benefits of Digitalization in Payments and Economy
October saw the Bank of Spain presenting a piece elucidating the essence and applications of the digital euro. The bank asserted that the tangible form of currency fails to harness the full potential of the expanding digitization of both the economy and society. Conversely, the advent of the digital euro will render electronic transactions a fundamental component of the financial structure.
The digital euro’s landing page shared by the European Central Bank (ECB) also includes an attached link offering essential details. It assures a more convenient lifestyle and a Europe bolstered with greater strength.
In October, the ECB’s governing council laid down the groundwork for the digital euro endeavor by embarking on the preparation phase. This crucial phase, spanning two years, will primarily involve establishing regulations about virtual currency and making choices regarding potential entities authorized to issue it.
The projected timeline indicated in the document suggests that the preparatory stage will be completed by 2025. Nevertheless, the final determination regarding the issuance of a pan-European Union central bank digital currency (CBDC) remains pending.
Spanish Population Shows Limited Enthusiasm for Digital Euro, Surveys Indicate Reluctance Among Majority
Even with these regulation advancements, it seems that the Spanish population is not particularly enthusiastic about the digital euro.
The Bank of Spain recently conducted a survey that revealed an interesting trend – out of all the participants, only 20% showed interest in adopting the pan-European Central Bank Digital Currency (CBDC) as a part of their everyday payment methods. Surprisingly, a notable majority of 65% expressed hesitancy, creating doubts about the potential acceptance and implementation of CBDCs within the Spanish financial sector.
A recent study uncovers scarce enthusiasm within the Spanish population for embracing the digital euro, as merely one-fifth of individuals are willing to incorporate it alongside traditional payment methods.
Over the past few years, Spain has witnessed noteworthy changes in its crypto environment, showcasing alterations in the acceptance patterns, regulatory tactics, and technological progress.
In 2023, Spain experienced a significant rise of about 56% in the count of cryptocurrency companies that were officially registered. This growth encompassed both local businesses and foreign platforms that obtained licenses as virtual asset service providers, enabling them to conduct operations within the nation.
The realm of stablecoin projects has witnessed pivotal developments as central banks worldwide delve into exploring Central Bank Digital Currencies (CBDCs). Russia, in particular, is gearing up to initiate the first CBDC pilot, a significant milestone that involves the participation of 13 banks and actual customers. The discussions revolving around CBDCs have gained momentum on a global scale.
Despite displaying initiative, the joint effort in developing Spain’s CBDC is overshadowed by a prevailing sense of doubt among the public and the continuous exploration of CBDCs on a global scale. This highlights the difficulties within the ever-changing realm of digital currencies.
Frequently Asked Questions:
1. Why have the Bank of Spain, Cecabank, Abanca, and Adhara Blockchain come together for their collaborative venture?
In an endeavor to evaluate the feasibility of Spain’s central bank digital currency (CBDC) initiative, a partnership has been formed to undertake a six-month pilot program.
2. What was the process of selecting collaborators for the experimental stage of CBDC testing?
Out of a total of 24 applications that were submitted over the previous year, the Bank of Spain has selected Cecabank, Abanca, and Adhara Blockchain.
3. How long will the testing phase last, and what activities will be included?
The trial period will span six months and encompass the emulation of interbank payment processing and settlement through the utilization of a solitary tokenized wholesale central bank digital currency (CBDC). Additionally, it will delve into the interchangeability of diverse wholesale CBDCs originating from various central banks.
4. In what capacity do Cecabank, Abanca, and Adhara Blockchain participate in the experiment?
Cecabank and Abanca have come together to establish a partnership aimed at finalizing a virtual tokenized bond utilizing the wholesale CBDC as an integral component of their experimental venture.
5. What sets apart the Spanish CBDC program from the digital euro project?
If the Spanish CBDC program were to be implemented, it should be noted that it is separate and unique from the digital euro project, which has the potential to encompass all economies within the eurozone.
6. What measures has Spain undertaken to regulate the cryptocurrency market?
Spain has taken an active role in executing the Markets in Crypto-Assets Regulation (MiCAR) by the European Union. It has also shared valuable knowledge regarding the features and possible uses of the digital euro.
7. When can we expect the digital euro project to be completed, and what specific areas are being prioritised in its preliminary phase?
The European Central Bank (ECB) and the Bank of Spain have jointly launched the digital euro project, which is set to embark upon a rigorous two-year preparation phase. Its primary objectives encompass finalizing comprehensive regulations governing the digital currency and determining potential candidates for issuance. It is anticipated that this preparatory stage shall come to fruition by the year 2025.
8. How does the Spanish public perceive the digital euro?
The Bank of Spain surveyed to determine the receptiveness of individuals towards incorporating the pan-European Central Bank Digital Currency (CBDC) into their customary payment systems. Out of all the participants, merely 20% displayed openness to embracing this new currency, whereas a significant 65% expressed hesitancy.
9. What changes has Spain witnessed in its cryptocurrency scenario over the past few years?
In 2023, there has been a remarkable shift in Spain’s cryptocurrency scenario, witnessing a substantial surge of 56% in the number of legally registered cryptocurrency enterprises functioning within the country.
10. Central Bank Digital Currencies (CBDCs) shed light on which worldwide breakthroughs?
Central banks around the world are actively exploring the concept of central bank digital currencies (CBDCs), as evidenced by Russia’s upcoming pilot program. This initiative involves 13 banks collaborating with real customers to launch the first CBDC pilot. However, the landscape of digital currencies is not without its challenges, as public skepticism and ongoing global CBDC explorations continue to pose hurdles.