The Bank of Spain launched a wholesale central bank digital currency (CBDM) project earlier this week to carry out its work.
Spain is interested in MNBCs
The Bank of Spain launched a tender earlier this week for a central bank digital currency (CBD) project:
Buscamos propuestas de colaboracion de organzaciones interesadas en nuestro programa de experimentación con tokens digitales para conocer las posibilidades reales de las monedas digitales de banco central de caracter mayorista. Consulta las bases aquí https://t.co/mzqJxh89w2 pic.twitter.com/3jU82s3TTI
– Banco de España (@BancoDeEspana) December 5, 2022
More specifically, it is a wholesale MNBC, which is intended to be used for settlements between financial institutions, as opposed to retail money, which is used for small, everyday transactions.
It is in the context of the rise of blockchain technologies and the tokenisation of finance that Spain wishes to get an idea of what these innovations can bring to the functioning of its operations:
In this space, the fundamental objective of central banks is to determine the effective capacity of these digital assets to increase the efficiency, agility and security with which financial market infrastructures operate. Moreover, their study can help quantify the extent to which they can help adapt these channels to the needs and requirements of an increasingly digital society. “
Interestingly, the Bank of Spain clarified that this initiative was independent of the current work of the European Central Bank (ECB) for the digital euro.
A call for expressions of interest
These experiments will focus on several areas, such as the study of the benefits of a wholesale MNBC to make financial assets more liquid, or the simulation of operations with such a system. These models will then be compared with traditional models to assess their advantages and disadvantages.
In order to carry out this project, the Bank of Spain is calling on interested parties to express themselves on its website. They have until 31 January at 18:00 local time to express their interest and submit their detailed project. After that, a collaboration agreement will be signed with the selected parties in order to continue the work.
Furthermore, the Bank of Spain states that it reserves the right to select projects only partially, or even to mix different proposals together in order to select what it considers to be the most suitable for its needs.
All this shows once again that authorities around the world are interested in the benefits of blockchains. And while MNBCs, whether wholesale or retail, are not yet the norm, many countries are investigating their potential for use.
