The Central Bank of Spain published its Strategic Plan for 2020-2024, describing the objectives and strategies it will follow to boost its economy and adapt the country’s finances to the requirements of the modern era, and a CBDC is one of its priorities.
The digital world is stealing the attention of the Spaniards. In its “Analysis and research priorities for the Banco de España: 2020-2024“, the Central Bank said it will prioritize the study of the legal, technological and financial framework surrounding the issuance of a possible CBDC to optimize the efficiency of banking processes.
Publicamos las prioridades de análisis e investigación del @BancoDeEspana para 2020-2024 en el contexto de nuestro #PlanEstratégico https://t.co/dGbwsx7adc
El gobernador #bdeHdeCos lo explica 📽️ https://t.co/81br6OLqpk #bdePrensa pic.twitter.com/iXFdUXPwGf
— Banco de España (@BancoDeEspana) October 16, 2020
A Spanish Currency on a Cadena de Bloques?
In a chapter dedicated to the development of “new technologies,” the Central Bank of Spain describes these innovations as a challenge for banks —which is why fintechs grew so much in recent years— but emphasizes the need to implement new solutions as society demands for more efficient processes over time.
The development of a digital currency falls within these “new technologies,” and the report shows an optimistic outlook on its potential:
Also, the use of these technologies can improve services the central bank provides, such as those relating to payment means, allowing for possibilities such as the introduction of digital currency, whose implications and design should be analyzed in depth.
There is a strong movement around the use of blockchain beyond token speculation in Spain. As an example, telecom corporation Telefonica deployed the largest private blockchain in the country, the Alastria association has developed multiple blockchain applications for digital identity, supply chain tracking, and enterprise solutions, and several regional universities started to apply this technology to combat the academic fraud so common in the region.
Considering this, it comes as no surprise that the Central Bank of Spain considers a CBDC to be a priority. The Bank didn’t give many details about the CBDC but assured it will consider various technological options to build that solution:
The implications for the financial system and the economy as a whole of the introduction of a central bank digital currency will be analyzed, considering various design proposals and including aspects relating to digital identification.
Spain is Not The Only Country Competing For The World’s First CBDC
This shift in interest is also a reaction to the global geopolitical landscape. The president of the Central Bank of Europe -and former president of the International Monetary Fund- Christine Lagarde, has shown her interest in a Digital Euro without ruling out blockchain technology for its development.
There is also a silent race to digitize the economy and get ahead of China in this aspect. Italy, The Netherlands, Estonia, France, Japan and even the United States have shown interest in developing a CBDC or at least using blockchain technology on their banking infraestructure, but are working slower than the Asian giant.
As with any strategic plan, the various divisions and autonomous agencies now need to define the multiple actions and goals aimed at fulfilling the Central Bank of Spain’s vision within their Annual Operational Plans. And although we are still far from seeing a Spanish currency running in the blockchain, the foundations laid by this plan allow for a clearer image of the future.