Spain Considers Implementing a Digital Euro

CORRECTION (June 30, 2021, 19:10 UTC): Spain's governing party has proposed examining how a digital euro would work, not a native central bank digital currency.

The Spanish Socialist Party (PSOE), the governing political body in Spain, has proposed the creation of a study group to implement the digital euro as a public digital currency. 

PSOE, which holds the presidency of the country and is the leading force in the Chamber of Deputies, presented a non-law proposition (PNL) in the Spanish Congress to support the launching of a digital euro in response to decreased usage of physical cash, according to an official document cited by the Spanish newspaper El Economista. 

New payment trends lead to a “purely private and more insecure money,” according to the political party, while its proposal is committed to “the recovery of money as a public good, more stable and under democratic control.” 

PSOE promoted this measure after the European Central Bank (ECB) announced its intentions to create a digital euro, the report added. 

Last week, the European Union designated the Bank of Spain and the National Securities Market Commission, Spain’s stock market regulator known as CNMV, to oversee crypto assets in the country. 

Carlos Conesa, general director of the financial innovation division at the Spanish Central Bank (Banco de España), said this month that “the decision to launch a project on the digital euro is very close,” the article added.  

According to the PSOE, a national digital currency would allow more liquidity in the system. “In the event that a monetary expansion is necessary, it allows a more direct mechanism by injecting liquidity directly into current accounts and thus transferring it immediately and without intermediaries to economic activity,” according to its proposal.

“It would be subject, as at present, ultimately to control by the representatives of the citizenry, who set its monetary policy objectives,” PSOE argued in its PNL presented in Congress, according to the report. 

PSOE insisted the project would be achieved “without the nationalization of the banking system or the nationalization of credit.”

A digital currency would end the “privilege” of banks over money, according to the proposal, defining a national digital currency as “a digital public money, intangible and perfectly usable to make electronic payments, but in this case backed by the state, making it a safe money.” 

Thus, “it is perfectly feasible that each individual can have his own account with his digital money directly at the central bank. A privilege, for the moment, restricted to banks.”