Five Spanish banks are starting a new sector proof of concept for the distribution of digital money in November this year as part of the Smart Money initiative sponsored by Iberpay. This was announced on November 13th through a press release, Iberpay.
The pilot project or proof of concept sponsored by Iberpay, the administrative body of the national payment system, aims to test the issuance, distribution, exchange and redemption of tokenized digital money in the controlled test environment of the Red-i (Interbank Blockchain Network). This proof of concept is also open and can have the additional participation of the rest of the Spanish banking system and will be extended until the second quarter of 2021.
After passing the first test, the banking companies Sabadell, Santander, Bankia, BBVA and CaixaBank successfully passed another new test in order to be able to carry out digital money transfers in the future.
This sector initiative has its origins in Smart Money and is a further development of the Smart Payment sector initiative for programmable payments, the test of which was successfully completed in July last year with the participation of the same financial companies.
With this example it was possible to validate the variability of the initiation of instant transfers, which are programmed in intelligent contracts, from blockchain networks such as Red-i through the connection to the national payment system (SNCE). In this first real test by Iberpay, more than 20,000 instant transfers were made.
The model proposed in this new test, as indicated by the note, focuses on testing the creation of tokens representing the digital form of money and their sectoral distribution by banks to their customers via the i-Network. A controlled sandpit is already available.
With this model, different design options for this digital representation of money are to be tested sectorally in order to ensure their future application in tokenized digital solutions, supported by funds and central bank accounts. Similarly, various options for the distribution of digital money by banks to their customers, as well as various options for the exchange of digital money between end customers, are being tested.
Iberpay: pioneer in financial innovation
Iberpay stated in its statement that the proof of concept for the Smart Money Sector Initiative has three main objectives. The first is “Advancing the financial sector and preparing for the foreseeable future development of the market towards tokenized digital money”. Secondly,“Experiment with the practical aspects and possible options for the design of digital money and its sectoral distribution.”as well as the impact on the financial sector.
And finally, “Promoting innovation in payments and the digitization of the economy by preparing new high quality digital services for businesses and individuals based on programmable and intelligent digital money.”
In this regard, Spanish financial institutions have taken the first step to enable instant programmable transfers on blockchain networks. With the creation of the first payment network for a blockchain economy, but with already existing payment instruments, in euros and bank accounts, without specifying the use of cryptocurrencies, which means the emergence of digital money for Spanish banks, giving them an advantage over theirs European colleagues in relation to this leap, not only in the industry but also for individuals and companies.
The progress is also coming at a time when the European Central Bank (ECB) has reactivated its digital euro project again as payment habits have changed during the pandemic and the pandemic that has established itself in the financial sector.