<p class="MsoNormal">Up
to 30 Spanish banks have partnered to carry out new proof-of-concept trials to
measure the impact of issuing a digital euro by the European Central
Bank (ECB). </p><p class="MsoNormal">The
partnership is being organized in collaboration with Bizum, a mobile payment solutions
provider, Iberpay, a payment service firm that oversees the Spanish interbank
payments infrastructure, and Redsys, a payment system services provider. </p><p class="MsoNormal">The
development comes almost two months after the <a href="https://www.financemagnates.com/fintech/ecb-selects-amazon-nexi-others-fordigital-euro-prototype-excercise/">ECB tapped Amazon</a>, Nexi and three other companies to
participate in a <a href="https://www.financemagnates.com/tag/digital-euro/" target="_blank">digital euro</a> payment prototyping exercise. The exercise is
part of ECB’s two-year digital euro investigation project and is expected
to be completed during the first quarter of 2023. Also, the new project comes over a year after Iberpay in collaboration with
the Bank of Span and 16 major Spanish banks successfully concluded their first
proof-of-concept trials. </p><p class="MsoNormal">For the new project, a working group has been
established. The
new project, which is expected to be rounded off in 2023, seeks to understand how
the digital euro can co-exist with the current payment systems. In addition, it seeks to
understand the technical, operational, and business dimensions to launch a
digital euro.</p><p class="MsoNormal">The new project will
test various use cases of a euro-denominated digital currency in a controlled production environment in accordance with the ECB's proposal for its use in the eurozone. Like
the ECB’s recently-launched prototyping exercise, the Spanish project will test
for e-commerce and point-of-sale payments usages. It will also test peer-to-peer online and offline payments usages. </p><p class="MsoNormal">Meanwhile,
the test is to be based on an accounts-based model where commercial banks act as
the custodians of their customers’ digital currency. </p><p class="MsoNormal text-align-justify">Previous Findings </p><p class="MsoNormal">At
the end of the first proof-of-concept trials conducted last year and <a href="https://www.bbva.com/en/spanish-banks-get-ready-for-the-digital-euro/">tagged ‘Smart Money’</a>, the Spanish
banking industry participants agreed that a digital currency backed by <a href="https://www.financemagnates.com/tag/european-central-bank/" target="_blank">the ECB</a> promises
lower volatility and greater security. They also proposed a collaborative model
for the digital euro: while the ECB issues the currency, the banks distribute
them to end users deploying their existing infrastructures. </p><p class="MsoNormal">Furthermore,
the group confirmed the possibility of applying limits to holding and using
digital euros for online and offline payments. They added that while digital
euro-based offline payment presents “enormous opportunities,” there was
the need to resolve barriers such as restrictions on the
use of near-field communication and the standardization of QR code usage in Europe.</p>
This article was written by Solomon Oladipupo at www.financemagnates.com.
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