The Bank of Spain, the country’s central bank, is to launch an experiment with wholesale Central Bank Digital Currencies (CBDCs). The tests will involve DLT and will be conducted this summer.
The Bank of Spain will experiment with wholesale CBDCs, which are theoretical currencies that are issued by a central bank and backed by fiat currency. This can be thought of as the equivalent of Bitcoin, but with much less volatility, as it’s backed by fiat currency.
The basic idea behind CBDCs is to give people access to a digital version of their national currency, allowing them easier access to financial services at a lower cost and without having to rely on third parties like banks or payment processors. In theory, this could help alleviate poverty and increase economic growth in developing nations whose citizens don’t have access to traditional banking services.
Bank Of Spain Playful With CBDC
CBDCs also offer advantages for developed nations like Spain: they make it easier for consumers and businesses alike to buy things online while avoiding fees associated with processing payments through third parties such as PayPal or other payment processors (which charge anywhere from 2% up).
The central bank of Spain will explore DLT, or distributed ledger technology, and experiment with wholesale CBDCs this summer.
The Bank of Spain announced on Friday that it’s exploring the possibilities of implementing a blockchain-based payment system for the country. In addition to DLT, the central bank will also evaluate whether it can create a wholesale CBDC—a digital currency used by large institutions like banks.
“This summer,” says Pablo Muñoz, an associate professor at IE Business School in Madrid, “the Bank of Spain will test out these two technologies using an internal system called SEPA Pay.” SEPA Pay allows European citizens who live outside their home countries to send payments from one European Union member state to another through their bank account at home (for example: you can use your Spanish bank account while living in Germany).