Bank of Spain Proposes CBDC Project

The Bank of Spain aims to launch a wholesale central bank digital currency programme and has requested bids from financial institutions and technology suppliers by 31 January.

The selected proposals must be completed in at least nine months, beginning on 3 April, with a completion date of 29 December, 2023. According to the selection process paper, they can offer an extension depending on many circumstances.

CBDC programme aim, according to the Bank of Spain

According to an official statement from the financial institution, the initiative aims to imitate the usage of a CBDC in wholesale transactions. In wholesale transactions, monies transfer between banks and financial institutions.

The bank claims the wholesale CBDC initiative is unrelated to the European Union's study on a retail digital euro. Separately, Banque de France announced two studies in September to evaluate the feasibility of a wholesale CBDC.

According to a translated 5 December announcement, it would use the programme to experiment with financial asset liquidation, simulate money movement, and assess the merits and downsides of incorporating a wholesale CBDC into its present procedures and infrastructure.

While a retail CBDC is available to the general public, a wholesale CBDC is a digital currency primarily used by financial institutions to keep reserves with a central bank.

The programme is unique to the BDE and is unrelated to work being done in the European Union to investigate the usage of a digital euro.

Reason for undertaking study

In justifying the initiative, the BDE stated that studying CBDCs can assist in assessing how much they can contribute to adapting to the requirements and expectations of an increasingly digital society.

CBDCs are also being "analysed and experimented" within various jurisdictions, with the primary focus being retail use. However, it claimed that more corporations are venturing into those of a wholesale or interbank kind".