On June 18, 2020, the Italian Banking Association (ABI) approved the criteria for a Central Bank Digital Currency (CBDC), bringing Italy a step closer to agreeing in principle to the possible launch of digital euro.
In a statement on “digital currency and CBDC,” the association voiced its approval of a European CBDC for public use, dubbing such a move as “an evolution of cash.” The ABI also stated that the European Central Bank (ECB) – which is yet to comment on the announcement – would be in charge of the digital euro project.
The Italian banker’s group appears keen to push ahead with a rollout and has offered to help with a pilot. Adopting a CBDC post-Covid-19 seems appropriate, especially with many central banks advocating for contactless payments to curb the spread of the novel virus.
Ensuring Public Trust is Key for the Digital Euro
In 2019, the ABI assigned a group of tech survey professionals and regulators to research the integration of blockchain to speed up the processing of interbank settlements in a project dubbed “Spunta.”
Now, the association in its latest announcement, revealed that it has laid down ten important considerations before the development of a digital euro follows.
A key inclusion was that of maintaining monetary stability and “full compliance” with the broader European framework, with the ABI highlighting this point to be preserved as a matter of priority.
Another consideration was prioritizing a compliant-ready framework that wins the public’s trust and participant banks playing a crucial role in ensuring no wrongdoing.
The report also underlined the importance of widespread belief and usability by primarily addressing the high-risk loopholes that come with other decentralized cryptocurrencies.
In terms of CBDC benefits, the ABI claimed that the innovation could lead to changes in how banking is conducted globally, bringing peer-to-peer transactions to everyday payments and increasing management of exchange rate as currency moves from fiat to digital.
A European digital currency would also automate and streamline some of the time-consuming practices of traditional banks by conducting machine-to-machine transactions, as well as minimize the risks associated with fluctuating exchange and interest rates.
The Race for Digital Euro in Europe Is On
Italy’s presence in the digital currency landscape is trailing that of other nations that have already embraced similar ventures.
Earlier this year, France’s Central Bank called for CBDC experiments, with the Dutch Central Bank also announcing the Netherlands was willing to trial a digital euro.
Similarly, the Association of German Banks announced that it is advocating for a programmable digital euro.
Italy is now set to overtake those nations with the decision of the ABI to pilot digital currencies, following in China’s footsteps, which is already testing a digital Yuan program in key cities.