For now, central banks around the world are still working on developing and testing their own CBDCs, but there are new ones that are joining the race all the time.

The Bank of Israel, reportedly just launched a cryptocurrency pilot program of its own, with plans to create a CBDC using Ethereum’s network.

However, it appears that the project is bound to run into a number of challenges.

So far, there are several major nations that are taking a lead in the CBDC development, including China, Sweden, Japan, and France. All of these countries were working on their own CBDCs for years at this point, so they do have quite the advantage on the newcomers such as the central bank of Israel.

Israel is in the initial stages of CBDC development, according to recent reports, and they decided to use Ethereum. The central bank’s CBDC Project Manager, Yoav Soffer, explained:

“We did a trial with Ethereum technology, not because we think that that’s necessarily the technology we’ll use, but because it was a technology that was available for us in order to understand its advantages and disadvantages.”

The purpose of this trial is simply to try and identify the advantages and disadvantages of digital currencies, and for that alone, Ethereum is just as good a solution as anything else.

However, Soffer did say that the initiative has been very challenging. He pointed out the complexity of the project, which makes it difficult to predict how long the testing of the project might last, or when it will end.

The challenges are many, starting with uncertainty about whether a digital currency would serve the local population’s needs, in the first place. The infrastructure for a product of this kind is not ready to survive in the long term, and there is no backup solution in case of the network’s breakdown.

“It’s rather challenging to run a project like this. In general, projects at the Bank of Israel have start and finish dates. You know when they will end and what you need to achieve along the way. We don’t know when this project will end, with all that that implies.” 

And, of course, the bank has to create a CBDC to be accessible and competitive compared to other types of payment.

China is currently leading the CBDC race with its digital yuan almost ready for launch. In fact, the public trials for digital yuan have been going on for nearly two years now after the completion of its development in 2019.

The head of the Bank of Russia, Elvira Nabiullina gave a negative answer to the question about the possibility of trading cryptocurrency ETFs in Russia.

On October 22, 2021, during a press conference following the meeting of the Board of Directors, the Chairman of the Bank of Russia Elvira Nabiullina said that the regulator was not ready to follow the example of the US Securities and Exchange Commission (SEC) and allow Bitcoin ETFs trading.

A similar response was expected since the head of the financial regulator has repeatedly and sharply criticized cryptocurrency projects.

On the other hand head of SEC USA, Gary Gensler said that they approved the launch of BTC futures ETFs since they can be attributed to financial instruments of the commodity market.

Gensler says that the BTC ETFs are controlled by the CFTC and are subject to the Investment Companies Act 1940.

Spanish banks are interested in providing cryptocurrency services directly to clients and expect the Spanish Central Bank will bring regulatory clarity for crypto.

Last June, the Spanish legislature proposed amendments requiring crypto service providers to register with the Bank of Spain.  The regulator plan to bring recommendations for registering cryptocurrency firms and trading platforms by October 29.

Cinco Días, dean of the economic and business press in Spain reports given the uncertainty surrounding the regulation of crypto assets, Spanish banks wishing to work with cryptocurrencies are not sure whether to provide crypto services or not because of unclear crypto rules and regulations.

Therefore, due to the lack of clear guidance from the Spanish Central Bank, local financial institutions have reached out to the regulator for clarification on whether to apply for registration to add support for crypto or not.

In June, the Swiss branch of the Spanish bank Banco Bilbao Vizcaya Argentaria (BBVA) has started to provide private clients with services for the storage and trading of bitcoin.

Gloria Hernández Aler, partner at the consulting firm finReg360 said:

“It makes no sense for banks not providing crypto services since their activities are already controlled by the Bank of Spain. However, they are required to notify the regulator of their intentions to provide customers with digital assets access. Banks also might need to change their anti-money laundering policy for adopting crypto-assets.”

Earlier, the Central Bank of Spain called investments in cryptocurrencies risky due to their high volatility, hacking risks, and lack of consumer protection rules. Last year the Spain central bank expressed its readiness to explore the possibility of launching its digital currency (CBDC).