Spain Considers National Digital Currency Alternative to Euro

The Spanish Socialist Party (PSOE), the governing political body in Spain, has proposed creating a national 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) which looks to launch a national digital currency in response to decreased usage of physical cash, according to the Spanish newspaper El Economista. 

The PNL argued that new payment trends lead to a “purely private and more insecure money” 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 report added.  

PSOE considered that 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”, the PNL pointed out.

If the proposal prospers, it would serve the government to eliminate the brake mechanisms that limit inflation such as the money supply, the article added, citing specialists. 

“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.

PSOE insisted that 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, the text stated, 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.” 

“At present, 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,” the text added.