Bank of Spain Will Start Testing CBDCs

The Central Bank of Spain (BDE) is going to start testing the wholesale of Central Bank Digital Currencies (CBDCs).

The Bank of Spain is conducting a study on how digital currencies can meet society’s demands with regard to digitalization.

In a recent statement, the Bank of Spain said that they will start “experimenting” with the impact of CBDCs through wholesaling. 

This study will seek understanding in three areas:

  • Analyze the movement of funds;
  • Analyze the liquidity of financial assets;
  • Analyze the advantages and disadvantages of wholesaling CBDCs.

In simple terms, the Bank of Spain will sell CBDCs to banks that may use CBDCs in their central bank reserves.

The statement made it clear, however, that this study is not related to the regulation procedures ongoing in the EU.

The results of the study may help the BDE determine the impact that CBDCs can have in terms of digitalization.

In order to participate in the study, participants must meet some key requirements, usually involving the financial ability of those latter.

With regards to this study, in Australia, the Assistant Governor of the Reserve Bank of Australia stated that CBDCs could make the non-banking public “avoid” commercial banks. 

Hence, he concluded that CBDCs could pose liquidity issues to those banks.

In other news, the Bank of Thailand is going to launch a retail sale of CBDCs to 10,000 people. The Bank of China, on the other hand, has already adopted CBDCs.

The crypto community does not factor CBDCs. Nonetheless, it is interesting to see whether these experiments will be effective. Maybe, they will just prove that CBDCs cannot entail the effectiveness of cryptocurrencies. CBDCs defeats the whole purpose of cryptocurrencies, which is decentralization.

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