Spain to Experiment with Wholesale CBDCs
The Bank of Spain (BDE) announced plans to create an experimental program to begin testing wholesale Central Bank Digital Currencies (CDBCs) and is soliciting partnership proposals from local financial and technological organizations. The bank will focus on three major areas with the program which seeks to simulate the movement of funds, experiment with the liquidation of financial assets, and analyse the benefits and drawbacks of introducing a wholesale CBDC to its current processes and infrastructure.
A wholesale CBDC is a digital currency that is primarily used by banks to retain reserves with a central bank, as opposed to a retail or general-purpose CBDC that is available to the general public. In justifying the initiative, the BDE stated that studying CBDCs can assist the assessment of how much they can contribute to adapting to the requirements and expectations of an increasingly digital society. It further claimed that CBDCs are being analysed and experimented within a number of countries, mostly for retail applications, but that more corporations are digging into those of a wholesale nature or interbank.
The RBA's Australian currency eAUD CBDC pilot, which began on 9th of August, has seen over 80 financial firms propose use cases, although banks may encounter liquidity concerns if a CBDC becomes the preferred source of holdings. The Bank of Thailand (BOT) also plans to start a retail CBDC trial by the end of 2022, with a testing population of 10,000 participants. This comes after the Bank of China launched the first trial of its e-CNY in April 2020, which is currently the most extensively used CBDC in the world, with 14 billion USD in transactions recorded during its pilot period.
Sources:
https://cointelegraph.com/news/spain-s-central-bank-to-experiment-with-wholesale-cbdcs
https://finance.yahoo.com/news/spain-central-bank-opens-call-174249256.html
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