Spain’s central bank confirmed experimenting with wholesale CBDCs to determine the extent of digital society’s needs and demands. BDE’s statement on December 5 announced its intentions to start an experimental program to ascertain wholesale CBDCs uptake in the country.
The translated statement indicated that BDE would collaborate with local finance providers supported by the technology institutions. BDE revealed threefold objectives to guide the experimental program. Primarily, the program aims to stimulate funds movement, test financial assets, and liquidate. Finally, the program will facilitate the analysis of drawbacks and benefits inherent in wholesale CBDC. The experiment results will help BDE ascertain the appropriateness of wholesale CBDCs relative to the present infrastructure and processes.
Wholesale CBDC Program Explained
BDE’s statement demonstrates wholesale CBDC as the digital currency utilized by the banks to store reserves with the country’s central bank. It differs from the retail CBDC, considered a general-purpose digital currency accessible for public use.
Further, the wholesale CBDC experiment involves an exclusive program distinct from the current research project undertaken by the European Union to test the viability of the digital euro.
The BDE statement invited interested parties to satisfy the minimum requirements outlined by the central bank. In addition, the interested participants should indicate the economic means they intend to commit to the project. Finally, the statement indicates the application window ends on January 31, 2023.
Reasons for Experimenting Wholesale CBDC
The BDE spokesperson explained that studying CBDC will enable Spain authorities to determine how they will adjust to satisfy the demands and needs of the digital society. The representative observed that the program was inspired to address the existing gap since most jurisdictions are experimenting with CBDCs only in their retail applications.
BDE considers that the increasingly digital society has attracted more institutions into the digitized assets ecosystem. As such, more companies seek wholesale nature and interbank transactions as viable alternatives.
Global CBDCs Projects
Elsewhere, the Reserve Bank of Australia (RBA) deputy governor Brad Jones admitted that retail CBDC could keep Australians away from commercial banks. Addressing the December 8 central bank conference, Jones indicated that retail CBDC could dislodge the Australian dollar.
Jones commended the success of the Australian CBDC (eAUD) experiment that began on August 9. Jones noted that financial entities that expressed interest in use cases exceeded 80. However, Jones regretted that eAUD could cause liquidity challenges for Australian banks if eAUD is the preferred holdings’ source.
Meanwhile, the Bank of Thailand (BOT) announced the launch of a pilot for its retail CBDC this month. However, the BOT executive confirmed limiting the testing environment to 10000 participants.
The recent announcements in Thailand and Australia emulate the Bank of China’s footsteps since e-CNY debuted in April 2020. Today, e-CNY is the leading CBDC in adoption globally, with $14 billion in transactions completed during the pilot phase.
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