El Banco de España (Spanish Central Bank) Licensed Testing of the digital euro token EURM.
The token was issued by Spanish fintech company Monei and was developed within the central bank’s digital “sandbox” program.
Spanish news site Cinco Dias report The project should initially be limited to a small group of test applicants. The applicant must enter a phone number, go through her video-based KYC process, and then load traditional euros into his wallet digitally through Spanish payment app Bizum.
Once the wallet is funded, users can send EURM tokens to other participants and registered businesses. Deposited fiat euros will be held in his two designated bank accounts: BBVA and CaixaBank. According to the announcement, all his EURM tokens will always be backed 1:1 with FIAT.
The pilot is expected to last up to 12 months, with a report being produced so the central bank can decide whether to approve a formal start. At the same time, there are already euro-pegged stablecoins such as Circle’s EUROC, Tether’s EURT, and Stasis Euro. Tether’s Euro token has the highest TVL for him, with a market cap of $223 million at the time of writing.
Banco de España does not approve stablecoins issued by companies such as Tether and Circle. As a result, central banks must have the ability to validate reserves so that all digital tokens are backed 1:1 in fiat currency.
Alex Saiz Verdaguer, founder and CEO of Monei, confirmed that “there are a lot of different projects, but it’s very likely that they’ll come together in the middle.” Furthermore, he said his EURM “could be a pilot test for the ECB.” So, when it comes to stablecoins he may not find the EURM token revolutionary, but his connection with the central bank of Spain shows his CBDC progress.
However, unlike other euro-pegged stablecoins, EURM’s vision is to allow El Banco de España to manage the issuance of a “programmable currency.”
Verdaguer told Cinco Dias that the token can be programmed to avoid negative balances and delay smart payments until funds are available.
Such features help prevent users from over-withdrawing or being charged additional bank fees. Digital currencies can also be programmed to automatically process a company’s payroll at predefined intervals.
Yet the level of control given to central banks through programmable currencies also increases the risk of exploitation by governments. For example, central banks can remotely limit the purchasing power of digital currency users or limit their use of certain services or products. Additionally, taxation can be controlled via smart contracts by paying taxes in real time based on income and usage.
Potential use cases for CBDC have been widely debated over the years. However, the news that important European central banks are testing digital token implementations certainly brings us closer to the realization of CBDC in Europe.