The Spanish Central Bank Will Test Out Wholesale CBDCs
The Bank of Spain said that the study will help them figure out how well they can meet the “needs and demands of an increasingly digital society.”
The Bank of Spain (BDE), which is Spain’s central bank, said it plans to start an experiment to test wholesale Central Bank Digital Currencies (CDBCs) and is looking for proposals from local finance and technology institutions to work together.
A translated statement from the bank from December 5 says that the program will focus on three main areas: simulating the movement of funds, experimenting with the sale of financial assets, and figuring out the pros and cons of adding a wholesale CBDC to its current processes and infrastructure.
A wholesale CBDC is a digital currency that is usually used by banks to store reserves with a central bank. This is different from a retail or general-purpose CBDC, which anyone can use.
The program is “exclusive” to the BDE, and it was said that it has nothing to do with the work being done in the European Union to study the use of a digital euro.
Those who want to join the program must meet the minimum requirements set by the bank and say what “economic means” they are willing to put into the project as part of an application process that ends on January 31, 2023.
The BDE said it was starting the program because studying CBDCs can help figure out how much they can help “adapt to the needs and demands of an increasingly digital society.”
It also said that CBDCs are being “analyzed and experimented” in a number of places, mostly for retail applications. However, it said that more companies are looking into “of a wholesale nature or interbank” applications.
Brad Jones, the Assistant Governor of the Reserve Bank of Australia (RBA), said at a central bank conference on Dec. 8 that a retail CBDC could cause people to stop using commercial banks and could even make the Australian dollar less valuable.
Jones said that more than 80 financial institutions have proposed use cases for the RBA’s Australian dollar eAUD CBDC trial, which was released on August 9. However, he also said that banks could have liquidity problems if CBDCs become the preferred source of holdings.
The Bank of Thailand (BOT) also plans to start a pilot of a retail CBDC before the end of 2022. Only 10,000 people will be able to participate in the test.
This happened after the Bank of China tested its e-CNY for the first time in April 2020. The e-CNY is now the most widely used CBDC in the world, and its pilot phase saw $14 billion worth of transactions.
