Banco de España will experiment with a digital currency

The Bank of Spain (BDE) on Monday announced an invitation to financial institutions and technology service providers to participate in the trial the institution intends to launch. This, with a view to issuing a central bank digital currency (CBDC) of a wholesale or interbank nature, also known as wholesale CBDC or w-CBDC.

In a press release issued on December 5, 2022, the Iberian country’s top monetary authority stressed that, taking into account the analyses and studies conducted on retail CBDCs, now seek the “cooperation” of companies “potentially interested” in w-CBDCs..

The EDL, which classifies these coins as tokens operating on a distributed technology platform, said this collaboration will be pursued through a program. He clarified that this experimentation “is not related to the work being done in the euro area as part of the research on a retail CBDC, the so-called digital euro.”

As reported by CryptoNews, the European Central Bank (ECB). has advanced research and studies on its CBDC. It is estimated that it will finally be issued in 2025, although Europe are still clinging to cash.

A retail CBDC is one under development within the ECB. This type of currency is intended for trade, payments, transactions and general operations. with this form of money by individuals and legal entities. In contrast, a wholesale CBDC (w-CBDC), focuses on interbank transactions.

EDB argues that the test of a wholesale CBDC. is an exclusive initiative on its partThe goal is “to assess the real potential of w-CBDCs, in line with the current state of technology and its reasonable evolution over time.”

It should be mentioned that last September, the Spanish financial institution was selected by the ECB To participate in the development of the digital euro, directly testing the integration of this technologyas reported by these media.

An experimental program on three fronts

The Banco de España indicated in its press release that the experimental program mentioned above will be divided into three strands.

The first will simulate the movement of funds of a w-CBDC. The second will attempt to test the integration of these currencies with financial asset settlement. The third will analyze the advantages and disadvantages of introducing a wholesale CBDC into the traditional financial infrastructure.

The financial institution pointed out that in order to participate in the trial program, interested companies must meet a number of requirements. set of requirements y submit an official application to the Banco de España. This, before January 31, 2023.

Companies affected will need to provide accurate information on the scope of their proposals. for the test. This includes the duration of the test, the stages in which it is organized, and the objectives it is intended to achieve.

In addition, the organization interested in collaborating with the EDL “must expressly indicate the material and economic means it is willing to commit to ensure its proper execution, also providing all the complementary documentation it deems appropriate for the accreditation of any of the above-mentioned points and others that may be present in the notice itself.”

After companies submit their proposals for collaboration, the EDL will review and evaluate each of them “according to the established criteria.” In this way, the agency will be able to arrange interviews with representatives of interested organizations. “before a final decision is made.”