February 6, 2023

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The Bank of Spain (BDE), Spain’s central bank, stated that it aims at introducing an experimental project to start testing the entire Central Bank Digital Currencies (CBDCs). The entity is presently pursuing to obtain partnership proposals from native financial technology-related organizations.

Spanish Central Bank to Undertake a Program to Examine Wholesale CBDCs

The bank will provide attention to the chief 3 areas with the respective project that focuses on stimulating the funds’ movement and experimentation with financial assets’ liquidation, along with the examination of the drawbacks and benefits of launching a wholesale CBDC in line with the existing infrastructure and procedures.

A wholesale CBDC denotes a digital currency, normally to be utilized by the banking institutions to maintain reserves with the central bank, in comparison with retail CBDC for general purposes of the common public.

The project is specific to the BDE, with the organization mentioning that it was not linked to the work being done by the institutions in the European Union while researching a digital euro’s utilization.

The entities having intentions to take part in the respective project require fulfilling the least requirements established by the central bank along with some other disclosures in their application procedure (that would come to a close on the 31st of January in the coming year).

Specifically, they are supposed to reveal the economic sources to be employed by them for the project.

While justifying its objective for beginning the project, it was mentioned by the BDE that the examination of the CBDCs can assist in guaranteeing the extent to which they can play a role in adapting to the demands as well as requirements of a growing digital society

. Apart from that, the central bank specified that they are experimenting with and analyzing several CBDCs being used in many jurisdictions which are chiefly focused on a retail applications.

Australian and Thailand-Based Banks Consider Entering the CBDC Sector

Nevertheless, it asserted that a lot of firms are entering the CBDC which are related to wholesale or interbank purposes. The Reserve Bank of Australia’s (RBA) Assistant Governor, Brad Jones, talked about the retail CBDCs on the 8th of December.

Jones, while appearing at a conference conducted by the central bank, expressed that the people can take benefit from a retail CBDC to entirely abandon commercial banks as well as likely shift the Australian dollar.

On the 9th of August 2022, the RBA initiated the CBDC trail of its Australian dollar as eAUD. The respective project has witnessed that more than eighty financial institutions have proposed the use cases, as mentioned by Jones.

However, he brought to the front that the banking institutions could go through liquidity problems if the consumers adopt a CBDC as a prioritized means of holding.

In addition to this, another central bank named the Bank of Thailand (BOT) is additionally moving toward commencing a pilot project comprising a retail CBDC in advance of this year’s denouement. As per the organization, just ten thousand people would be included in the testing environment.

This move is undertaken well after the initial test of the e-CNY by the Chinese central bank in 2020’s April. At the moment, e-CNY is known as the most broadly embraced CBDC across the globe. During its pilot phase, transactions of up to $14B worth were carried out by the Bank of China.

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