A new dawn might have just dawned, as the Italian Banking Association (IBA) revealed its willingness to support the implementation of a digital currency from the European Central Bank. A publication on the ABI website on June 18 stated that Italian banks were available to take part in projects and experiments of a digital currency of the Central Bank. This initiative was supported by skills acquired in the creation of infrastructure and distributed governance, which would speed up an implementation of any initiative of the kind, in the European level.
The website further claimed that a working group was set up last year, dedicated in matters regarding digital coins and crypto assets. This working group has ten priorities, among them monetary stability, trust of the digital currencies by citizens, development of useful tools for the Euro area, and protection of citizens’ personal data.
According to IBA, the creation of a European Central Bank Digital Currency (CBDC) may influence the possibilities of a greater amount of global peer-to-peer transactions, reduce the impact of interest and exchange rates, and reduce the size of administrative process of payments in the long-run.
The association further claimed that if the digital currency were created in the European Union, it would affect the demand for cryptocurrencies among citizens. The citizens would be less attracted to cryptos issued by individuals or companies, although they are decentralized, and have more interest for a Central Bank issued crypto.
The CBDC would not be the first distributed ledger technology that Italy would use, if it were created, as ABI applies the technology for its blockchain powered interbanking system. The system is run on a project called Spunta, whereby six other European countries are included: Malta, France, Spain, Portugal, Cyprus, and Greece.
The creation of CBDCs would affect the role of Italy’s Central Bank and may affect financial intermediation. The ease of payments and transactions would make the institution more efficient but have an effect on its power and ability to track down all transactions that users make in a day. Additionally, the introduction of CBDC could lead to a wider presence of central banks in financial systems, hence it would be tasked with allocation of economic resources to citizens. Government organizations have not had success in allocation of economic resources as well as private organizations; hence this can result to huge losses if proper planning is not made prior to their implementation.
On May 20, France became the first country to successfully run a digital euro operational on the blockchain trial. Other European Central Banks including the Dutch Central Bank have also shown their interest in being part of the creation of CBDCs in the EU.
Image courtesy of Pixabay
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