Sabadell, Santander, Bankia, BBVA and CaixaBank will begin a new proof of concept on Red-i to evaluate the creation and distribution of tokens among the different Spanish banking entities.
La Interbank Blockchain Network (Red-i) powered by Iberpay is a technology-based payment network blockchain which integrates several of the existing and traditionally known financial instruments. This network seeks to provide the possibility for banking entities to carry out their transfers and operations in an instant, programmable and guaranteed manner, without the need to use crypto assets.
The network, which has been developing since 2018 in collaboration with several renowned banking entities, will start a new proof of concept where 5 of the main Spanish banks will participate: Sabadell, Santander, Bankia, BBVA y CaixaBank. The objective is to evaluate the processes of issuing, distributing, exchanging and redeeming tokenized digital money in the Red-i controlled test environment. With this sectoral proof of concept, banking entities will be able to learn about and test the creation of tokens that represent fiat money in digital form, in addition to their subsequent distribution among the different participating banks. Likewise, the proof of concept will allow banking entities to continue evaluating the viability of carrying out immediate transfers programmed within smart contracts (smart contracts) based on blockchain networks.
The proof of concept will last until the second quarter of 2021 and will integrate more banking entities in the future to evaluate the processes of creating and distributing tokens more broadly. The Intercambiaria Blockchain Network has its origins within Iberpay's digital money sector initiative. SmartMoney, which lays the foundations for the construction of a new economic model based on blockchain networks.
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A second proof of concept
In July, the Spanish banking sector carried out what would be the first proof of concept in the Red-i network to evaluate the viability of immediate and programmable transactions from blockchain networks. This first test was carried out within the sector initiative for programmable payments Smart payments and included the participation of the same banking entities mentioned above.
The second proof of concept, which is part of the Smart Money digital money sector initiative, is a continuation and natural evolution of this first test. As Iberpay's blockchain-based economy initiative is based on implementing this technology alongside traditional financial instruments, the Red-i must meet certain fundamental parameters, including the feasibility of carrying out immediate transactions programmable in smart contracts and the tokenization of fiat money to carry out commercial operations between different banks.
Tokenization of money
As explained in the press release, the new proof of concept is focused on digitally representing money, so it will evaluate the creation of tokens in a controlled test environment that is already available. Iberpay makes clear the importance of evaluating this process for the development of a new digital economy model, so it intends to “sectorally test” the different design options that exist for the digital representation of money, in addition to testing different options for the distribution of digital money by banking entities to their clients, as well as the different ways of exchanging digital money between end clients.
Source: Iberpay.
This proof of concept will allow banking entities to be at the forefront of new technological developments, experimenting with the technical and practical aspects of tokenization and promoting the digitalization of the economy. Likewise, with this test, entities will be able to be prepared for the imminent transformation of the current financial system, which is moving towards a new high-value digital model based on new technologies such as blockchain.
Iberpay, the Spanish company that manages the National Electronic Clearing System (SNCE), also highlights the importance of the country's banking entities adapting to new technologies and offering new and innovative products and services to their clients, guaranteeing maximum security, reliability and compliance.
Digital transformation of the financial system
The development of the new Iberpay proof of concept by the Spanish banking system coincides with the approval and publication in the Official Gazette of the Law for the Digital Transformation of the Financial System of Spain, approved unanimously in the Senate a few days ago. With this law, Spain seeks to offer a regulated testing environment (regulatory sandbox) to enable the development of innovative technological products in a safe and controlled manner. The vision for the future is to reform and innovate the country's current financial system and position Spain as a technological leader and benchmark in Europe and the world, while optimising all its financial services and facilitating access to financing for Spanish startups.
The Bank of Spain also understands the importance of new technologies and their impact on the current financial system, which is why it established in its Strategic Plan 2020-2024 objectives focused on evaluating the digital transformation, which now becomes one of the highest priorities for the entity. Finally, the European Central Bank is also studying the possibility of issuing a digital euro, or cryptoeuro, considering the evolution of current payment systems and the need to offer highly efficient digital services.
The five major banks involved in the development of this blockchain payment network are seeking to become the first banking entities to carry out digital money transactions using euros, bank accounts and blockchain networks, “without requiring the use of cryptocurrencies,” as Iberpay previously indicated.
Continue reading: Strategic Plan 2024 of the Bank of Spain includes development of CBDC and digital transformation of the financial system
