Financial Technology,Risk and Regulation,technology,Transaction Banking,

Financial Technology,Risk and Regulation,technology,Transaction Banking,

Catalonia is working with fintech experts in Estonia to create a new digital currency for the region, it has been reported, even as Spain attempts to bring the would-be republic under state rule.

The news comes amid growing fears that Madrid will struggle to impose control over the breakaway region, with experts predicting more of the violence and civil unrest seen during the October 1 referendum.

The Catalan government declared the region independent on Friday, but hours later Mariano Rajoy's Spanish government voted to enact Article 155, bringing Catalonia under the direct rule of Madrid.

Spain has announced new regional elections to be held in December, and said sacked Catalan president Carles Puigdemont was "welcome" to stand evan though Spanish prosecutors have announced plans to charge him with "rebellion".

Mr Pudigemont has called on supporters to "democratically oppose" Spanish rule in a television broadcast hours after his dismissal.

Now hard-line seperatists are said to be working on a new blockchain currency similar to the "Plan B" initiative cooked up by Syriza in the midst of the Greek financial crisis, The Telegraph reported.

Bareclona crytographers are reportedly taking advice from cryptocurrency expert Vitalik Buterin, founder of blockchain platform Etherium, and programmers in digital-savvy Estonia.

The idea is to create a currency free of control from both Spain and the European Central Bank.

Catalonia had previously been warned that it would be thrown out of the Euro if it became independent, losing access to the single market and all the other freedoms of EU membership.

Like Brexit, opponents of Catalan independence view the move as an extraordinary act of politicial and economic self harm.

But independence of the wealthy region would also pose an unprecedented threat to the EU far worse than that of Brexit, in large part because of its eurozone membership.

According to the BBC's economic correspondent Kamal Ahmed, a crackdown on Catalan independence would be welcomed by eurozone states since the future of the single currency depends on it.

Mr Ahmed told Radio 4 Today: "Markets are quiet at the moment, but they will now determine whether this political crisis turns into an economic crisis.

"Catalonia is a big economy, its GDP is £196billion a year, it has a bigger economy than Portugal.

"This is worse than Brexit, simply because there is absolutely no rulebook for a country leaving the eurozone, not just the EU."

He explained that if Catalonia were to go it alone, as an independent state, the long-term "grand plans" of Jean-Claude Juncker and those in Brussels would be thrown into peril.

Mr Ahmed claimed that a dramatic departure from the EU would leave the bloc scrambling to fill a "massive" budget hole.

Re-disseminated by The Asian Banker from Express.co.uk