The Bank of Spain (BDE) has expressed its intention to launch a pilot program soon, which will test the use cases of wholesale CBDCs. The central bank has requested cooperation proposals from local fintech organizations that could potentially help the administration conduct a detailed examination of its future CBDC. The list of countries that are experimenting with their respective blockchain-based digital currencies has grown in recent times. Spain is the latest country to join this list.
CBDC or central bank digital currency represent any fiat currency, on the blockchain network. Wholesale CBDCs allow the banks that issue them to hold reserves with a central bank. This form of CBDC is mainly used by financial institutions, rather than the general public, for everyday use cases.
The BDE has named three focal points for the Spanish CBDC trial text. That is — triggering the movement of funds, examining the use of CBDCs in facilitating financial liquidation, and looking at the pros and cons of introducing a wholesale CBDC, CoinTelegraph speak in a report.
The BDE has clarified that this test is their ‘exclusive’ work while European Union (EU) continues with its own research and development around blockchain or cryptocurrency experiments.
The results of this project will add to the internal research BDE is conducting around digital currencies. The aim was to find out if CBDCs could improve existing digital economic systems.
Companies wishing to participate with the BDE in this test must submit details of how they wish to contribute by January 31, 2023.
While countries like Jamaica and Nigeria implemented their CBDC, countries like India, China, Pakistanand Japan are working rapidly on testing their respective CBDCs.
However, it is worth noting that Spain is the only country that is testing a wholesale CBDC, which would be useful for banks instead of a traditional, commercial CBDC.
Transactions through the CBDC are expected to make the process faster while keeping all records stored on the blockchain, transparent and immutable.
