Italy is joining China and other countries in embracing the concept of digital currency.
The Italian Banking Association (ABI) says its members are willing to pilot a digital version of the euro.
ABI, comprised of over 700 Italian banking institutions, expressed its desire to help accelerate the implementation of a digital currency backed by the European Central Bank (ECB) by participating in related projects and experiments. Last year, ABI set up a working group to research digital and crypto assets, Yahoo Finance reported.
The group shared 10 considerations for a digital euro in its announcement, starting with, “Monetary stability and full compliance with the European regulatory framework must be preserved as a matter of priority.”
The group prioritized the need for a digital currency framework to be fully compliant with EU regulations to win the public’s trust, and said banks will play a critical role in upholding that trust.
In its second guideline, the group said Italian banks are already working with distributed ledger technology, referencing the Spunta project. The project was an initiative by the ABI Lab to integrate blockchain to speed up the processing of interbank settlements.
According to the group, a central bank digital currency (CBDC) would lead to future innovations to the traditional banking system like P2P transactions, machine-to-machine transactions and the ability to manage exchange rate and interest rate risk thanks to the programmable capabilities of digital currencies.
“A programmable digital currency represents an innovation in the financial field capable of profoundly revolutionizing money and exchange. This is a transformation capable of bringing significant potential added value, particularly in terms of the efficiency of the operating and management processes,” the announcement said.
Italy is not the first nation to express an interest in experimenting with a digital euro. Earlier this year, France’s central bank sent out a call for proposals for CBDC experiments. The Dutch Central Bank also announced the Netherlands was willing to trial a digital euro.
Last year, the head of Germany’s Central Bank Jens Weidmann, in a speech, warned that a CBDC could destabilize financial systems. Later in the year, the Association of German Banks made an announcement advocating for a programmable digital euro.
China is already piloting a digital yuan program in key cities, including Shenzen, Chengdu, and Xiong’an, an upcoming metropolis outside Beijing that the government is developing to become a “smart city.” In this smart city, people will use digital money when paying for anything, such as bus rides and grocery shopping, International Business Times reported.
Yi Gang, governor of the People’s Bank of China (PBOC), earlier said that these pilot tests should not be confused with the CBDC’s official launch. The trial has nevertheless included pilot tests in businesses such as Starbucks and McDonalds. Woo said China’s speed in deploying projects nationally should not be understated, backing his statement that if China finally launched CBDC, the country will be the first one to do so.
The Italian Central Bank has yet to comment on ABI’s announcement.