Spain's Financial Innovation: Testing a Euro-Backed Token While Exploring Digital Currency

Spain has solidified its position as a key player in European financial innovation. The Banco de España recently greenlit Monei, a fintech startup, to pilot EURM—a digital token backed by physical euros—through the country’s central bank sandbox program. This initiative represents a significant step toward understanding how blockchain-based solutions could reshape how Europeans transact.

What Currency Does Spain Use Today?

The euro (€) serves as Spain’s official currency, establishing the monetary backbone for all financial activities across the nation. Spain adopted the euro for electronic transactions beginning January 1, 1999, transitioning away from the traditional Spanish Peseta (ESP). The shift to physical euro banknotes and coins occurred on January 1, 2002, making cash transactions seamless across borders.

Today, the euro functions as the official currency for 20 of the EU’s 27 member states, collectively forming the Eurozone—a unified economic region. With approximately 341 million daily users worldwide, the euro ranks as the second most-used currency globally, trailing only the US dollar. This widespread adoption has fostered deeper economic integration by reducing transaction costs, minimizing exchange rate risks, and facilitating cross-border trade and tourism.

The physical euro currency comprises eight coin denominations (1, 2, 5, 10, 20, and 50 cents, plus €1 and €2) and seven banknote denominations (€5, €10, €20, €50, €100, €200, and €500). Each coin features a shared European design on one side and a national design chosen by individual countries on the other, while banknotes showcase architectural elements representing different periods of European history.

The EURM Token: Spain’s Private Digital Euro Initiative

Monei’s groundbreaking EURM token operates as a blockchain-based digital asset maintained in reserve by two prominent Spanish financial institutions: Banco Bilbao Vizcaya Argentaria and Caixabank. The token’s core function centers on enabling rapid, cost-efficient transactions for verified users, with wallet funding available through traditional euros and transfer capabilities up to €10 per transaction.

This pilot program operates within Spain’s financial sandbox—a controlled experimental environment designed to test innovative financial products under central bank supervision. By segregating innovation from the broader financial system, regulators can assess risks while supporting technological advancement.

Distinguishing EURM from the Official Digital Euro Project

The EURM initiative differs fundamentally from the European Central Bank’s digital euro initiative. While EURM represents a private blockchain solution backed by commercial banks, the digital euro would constitute an official central bank digital currency (CBDC) issued directly by the ECB as a supplement to cash.

The ECB initiated its investigation phase for the digital euro in July 2021, allocating two years for comprehensive research into design specifications and operational mechanics. The ECB Governing Council scheduled a review of findings for Q3 2023. Monei executives suggest that successful EURM testing could establish important precedents: regulatory oversight and product viability could position Spain to collaborate with the ECB in shaping future digital euro frameworks.

The Broader Context

Spain’s exploration of both private token solutions and participation in the ECB’s digital currency development reflects the nation’s strategic position in European financial modernization. The euro’s establishment as Spain’s official currency nearly 25 years ago created the foundation for this evolution. Today, continued experimentation with blockchain-based representations of the euro demonstrates how legacy currency systems adapt to technological transformation while maintaining monetary stability and regulatory oversight.