Spain’s Banco de España has announced a partnership with Cecabank, Abanca, and Adhara Blockchain to conduct a pilot program exploring the use of a wholesale Central Bank Digital Currency (CBDC). This initiative, announced on January 3, 2024, is a significant step towards understanding the potential of digital currency in interbank operations.
The pilot program will simulate the processing and settlement of interbank payments using a tokenized wholesale CBDC. Additionally, it will involve exchanging several wholesale CBDCs issued by different central banks. Adhara Blockchain, with its headquarters in the United Kingdom, is one of three chosen companies from 24 applications received over the past year by the Banco de España for this project.
The collaboration with Adhara Blockchain will focus on experimenting with both a tokenized CBDC and multiple wholesale CBDCs for interbank payments. This will involve setting up two platforms: a wholesale CBDC infrastructure providing digital wallets for entities, and a digital orchestration platform for interbank payments. The key tasks will include issuing wholesale CBDCs, managing access and operation permissions, monitoring transactions, and real-time tracking of interbank payments.
Concurrently, the agreement with the Cecabank-Abanca consortium will concentrate on financing operations and asset custody. This part of the experiment will explore the issuance, tokenization, and registration of a simulated tokenized bond on a blockchain platform managed by Cecabank. It also aims to simulate the issuance of a wholesale CBDC by Banco de España and its distribution to entities for use as a settlement asset. The experiment will include studying the custody of assets through digital wallets, placement and subscription of tokenized bond shares, and the registration and payment of accrued coupons in wholesale CBDC to bondholders. Additionally, it will explore the creation of a secondary market for tokenized bond shares and cross-border operations for issuing a wholesale CBDC in foreign currency. Another aspect of the experiment may include repo operations using the tokenized bond as collateral, providing liquidity to the owner in the form of a wholesale CBDC.
Significantly, these agreements do not involve any financial compensation. Each participating entity will bear the costs of the actions they decide to undertake.
In summary, the Banco de España’s collaboration with Cecabank, Abanca, and Adhara Blockchain for a wholesale CBDC pilot marks a pivotal movement in Spain’s exploration of digital currency’s role in interbank operations. The pilot, focusing on processing and settling interbank payments with a tokenized wholesale CBDC and experimenting with various aspects of digital currency management, highlights the growing interest and potential of CBDCs in the modern financial landscape.
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