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Banco de España, Spain’s banking regulator, has announced the selection of three entities to participate in its wholesale central bank digital currency (CBDC) pilot, one year after issuing an open call for partners.

The Spanish central bank will proceed with the CBDC experiment with the Cecabank,
Abanca, and Adhara Blockchain. Banco de España selected the three from a pool of 24 applicants spanning commercial banks, payment services providers, and blockchain technology firms.

The CBDC study will advance on two fronts, with the first centered on developing a tokenized deposit solution for processing and settling interbank payments. The pilot will also involve a joint exploration of a cross-border CBDC system, but it remains unclear how the offering will fare alongside the widely expected digital yuan.

The second leg of Spain’s CBDC study will involve a consortium between Cecabank and Abanca, involving the settlement of tokenized securities on the blockchain. Rather than merely scratching the surface, the Cecabank-Abanca consortium will explore atomic settlements for bond issuance.

The pilot is expected to run for six months and will operate as simulations before real-world use cases. A closer look at the central bank’s announcement indicates plans to use the wholesale CBDC system for coupon payments, with experts predicting the onboarding of new participants to explore new use cases.

Independent of the digital euro

During its call for partners in late 2022, the Central Bank of Spain disclosed that its
experiments with a wholesale CBDC will be independent of the efforts of the European Central Bank (ECB) to roll out a digital euro.

Despite its independent studies, the Spanish central bank hinted at fully embracing the digital euro, citing its privacy and potential offline payment functionality. It is expected that the digital euro will focus on the retail side of things while Spain’s CBDC pilot will explore the settlement of interbank transfers.

Several central banks across Europe are proceeding with their independent wholesale CBDC studies, with France and Germany leading the charge.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.

Watch: Blockchain provides perfect foundation for CBDC

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