Italian Banking Association Gives Digital Euro the Green Light
The Executive Committee of the Italian Banking Association (ABI) has approved ten criteria for a Central Bank Digital Currency (CBDC), bringing Italy a step closer to agreeing in principle to the possible launch of digital euro.
Associazione Bancaria Italiana is the trade association of Italian banks, founded in 1919, and comprises 707 members. As ongoing discussions over the digital euro continue, the association has made its stance clear.
In a ABI statement on "digital currency and [CBDC]," the organization voiced its approval. The Association stated that a European CBDC intended for the public could represent "an evolution of cash."
The ABI has stated that the European Central Bank (ECB) - which is yet to comment on the announcement - would be in charge of the digital euro project. However, the ABI appears keen to push ahead with a rollout, and has offered to help with a pilot. The announcement states that the association set up a working group last year. Its aim, says ABI, is to explore the application of digital coins and crypto-assets.
The first of the ABI's 10 considerations for a digital euro issuance is "monetary stability and full respect for the European regulatory framework must be preserved as a matter of priority."
Digital money must be "fully trusted" by the citizens, a criterion that requires adherence to "the highest standards of regulatory compliance, safety and supervision." Furthermore, emphasis must be placed on personal data protection.
ABI also states that "programmable digital currency represents an innovation in the financial field capable of profoundly revolutionizing money and exchange," which could bring about significant improvements, particularly when it comes to the efficiency of operating and management processes.
The ABI said,
"Hence the importance of dedicating attention and energy to develop, quickly and with the collaboration of all the players in the ecosystem, useful tools above all for the development of the Euro area."
Because of the role to be played by the ECB, a CBDC would be "the instrument" that reconciles the need for innovation and "interoperability with the analog world." The Association added that "the existence of such an instrument could at the same time reduce the attractiveness of instruments of comparable use but issued by private individuals or (in cases of complete decentralization) that cannot be identified, characterized by an intrinsically higher risk profile."
The role of the bank will remain crucial, argues ABI, in future work on "the identification of the distribution, conservation and exchange model of digital currencies" that would serve end-users' needs and maintain regulatory compliance.
Some of the benefits of a CBDC would include the settlement of cross-border peer-to-peer transactions, mitigating interest rates, and easier machine-to-machine transactions.
Italian banks are already making use of distributed ledger technology (DLT) infrastructure via the Spunta project, which is set for full rollout in the domestic banking sector in March 2020. Banks "are intended to be part of the change brought about by an important innovation such as digital coins," added the ABI.
As previously reported, the French central bank, the Banque de France, said it has already successfully tested a digital euro, its CBDC, operational on a blockchain, on May 14 this year. The bank said it cooperated with major bank Société Générale Forge on the trial, with more trials planned in the future in conjunction with other players.