Spanish Central Bank Allows Trials of Euro-Denominated Stablecoins

Stablecoins pegged to the euro

The Bank of Spain (El Banco de España) has authorized fintech company Monei to test the euro-denominated stablecoin EURM on the 18th.

According to local media Cinco Dias, EURM is a digital currency developed by Monei within the framework of the Sandbox of the Bank of Spain, aiming to be a preliminary experiment for the digital euro planned by the European Central Bank (ECB). It says.

The demonstration experiment will be conducted in a small group and will be limited to domestic transactions. The trial period is expected to last six to 12 months, after which data will be collected and reports will be produced before Banco de Spain will decide whether to allow the service to be opened to the public.

Participation is limited to residents of Spain, with a limit of €10 per person. The desired user enters their phone number, and after verifying their identity on their smartphone, deposits euros into their wallet using the popular Spanish payment app “Bizum”. The same amount of EURM tokens are automatically created on the Polygon Blockchain.

The collateral funds for the EURM issuance are said to be 1:1 backed by euros held in accounts of major local financial institutions BBVA and CaixaBank. EURM can be used to send money to other users and businesses.

Álex Saiz Verdaguer, Founder and CEO of Monei, said: “The future of payments is digital and this project is our chance to show Europe and the world that we are at the forefront of it.”

Connect to ECB-issued digital euro

Euro-denominated stablecoins have already been issued by Tether and Circle. In addition, France’s LUGH has a history of issuing a stablecoin audited by Deloitte in 2021. On the other hand, Monei’s stablecoin is being conducted as a demonstration experiment by the Bank of Spain, and it can be said that it is superior to other stablecoins in terms of regulation.

Regulations on stablecoin issuance in Europe include a comprehensive bill on crypto assets (virtual currencies) called MiCA, but the final vote has been postponed to March and has not yet been ratified.

Monei says EURM is intended to serve as a universal project for a digital euro that can be expanded to other European countries. It also appears to be hopeful that it could serve as a pilot test for the digital euro issued by the ECB.

ECB’s Digital Euro Plan

In July 2021, the ECB announced the launch of the Central Bank Digital Currency (CBDC) digital euro project. The project was divided into two phases, with a policy of setting the first phase to 2023 as the research period.

After that, in September 2022, the European Central Bank (ECB) announced that it had selected five participating companies, including IT giant Amazon, to test the digital euro. Check how well the technology being developed for the digital euro is compatible with each company’s system. E-commerce payment, P2P (peer-to-peer) payment, point of sale (POS) payment, etc. will be tested as introduction cases.

The test is a key step in the digital euro project’s “two-year study period,” the ECB explained.

Relation:Five companies including Amazon to participate in digital euro experiment