July 14, 2020

Market News

Italian banking association ready for digital euro

Good news for the digital euro. The latest news about a digital banking currency and the Dutch and French central banks published concrete plans. With a large Italian banking association, an important institution of the European Central Bank (ECB) now offered its support. ECB chief Christine Lagarde has recently been open to the introduction of a cryptocurrency for banking. The Italian Banking Association (ABI) was ready to take part in experiments and projects. This fact is not only a positive sign for the banks, but for the entire crypto scene.

Italian banking association calls for the digital euro

The ABI, the acronym of the Italian banking association, wants to support the European Central Bank in its activities regarding a digital central bank currency. In principle, such a currency, also known as the Central Bank Digital Currency (CBDC), is a digital variant of a country's classic FIAT currency. This digital currency is issued and regulated centrally by the responsible state authority. For the banks, a Central Bank Digital Currency would have the advantage of significantly simplifying cross-country currency transfer and transmission channels. At the same time, such a banking currency also serves as a response to the decentralized cryptocurrencies, which cannot be regulated by the banks.

In the form of an update on the website of the Italian banking association, she now commented on a digital banking currency. The association, which represents a large number of Italian private banks, offered the ECB support in working on a CBDC. In the statement, the ABI announced that digital money must be trusted by citizens in all circumstances. Problems typical of cryptocurrencies, such as volatility and unclear regulations, should not be an issue in the case of a digital euro. The Italian banking association sees a digital currency for banks as a logical consequence in the future due to the increasing cross-border transactions.

“Digital money must enjoy the full trust of citizens. It is essential that the highest standards for regulations, security and surveillance are adhered to. "

The digital euro is becoming increasingly popular

As mentioned at the beginning, there has been increasing interest in the introduction of a digital euro in the recent past. The French central bank in particular was only able to present a first positive test in May of this year. For the first time, a digital banking currency could be sent via the blockchain. At the same time , the Dutch central bank also stated that it will play a leading role in the development of a central bank digital currency. To this end, the institution published a 45-page report in which it stated that it wanted to take a leading position in the EU-wide introduction of a digital banking currency. In connection with this, the Dutch central bank announced that the state's own banking network could serve as a test bed for this.

The offer of the Italian banking association is no coincidence. ABI already uses Distributed Ledger Technology (DLT) for its interbanking system. This system is based on its own blockchain and is the basis for the Spunta project. Spunta is a project from six European countries and Italy, which jointly promote the use of distributed ledger technology. Such a project is now apparently also planned in connection with the digital euro. In this context, not only the technical implementation but also compliance with legal regulations should be checked. With around 700 partner banks, the banking association can deliver a correspondingly large network.

Why a digital banking currency is so important

The efforts of the central banks should not just remain with a project status. Financial experts see a digital banking currency as a revolution for internal and cross-border transactions. Such a digital banking currency is covered by physical reserves such as gold or foreign exchange, which ensures currency stability. For the existing decentralized cryptocurrencies, the introduction of a Central Bank Digital Currency could have an indirect impact. Rather, a digital banking currency is of great importance for the crypto scene. The acceptance of blockchain technology in traditional banking could create nationwide trust among investors, who in turn could also deal with decentralized cryptocurrencies.

Summary: Italian banking association is pushing the digital euro

The Italian banking association ABI offers the European Central Bank its support in the development of a digital euro. With its 700 partner banks, ABI wants to offer a network that could serve as a test environment. In addition to several central banks, a banking association has agreed to support the European Central Bank in its activities for the first time.

This could be a positive signal for the entire crypto scene. If the institutions succeed in successfully bringing the digital euro onto the blockchain, investors' confidence in blockchain technology could increase. Accordingly, decentralized projects such as Bitcoin or Ethereum could also benefit from a Central Bank Digital Currency.