The Executive Committee of the Italian Banking Association announced that is has approved the general guidelines for the position on digital currency and Central Bank Digital Currency (CBDC). In the announcement it read, ” Italian banks are available to participate in projects and experiments of a digital currency of the European Central Bank, contributing, thanks to the skills acquired in the creation of infrastructure and distributed governance, to speed up the implementation of a European-level initiative in a first nation.”
A year ago the Association of Italian Banks set up a working group dedicated to deepening the understanding related to digital coins and crypto assets. From this group 10 recommenations were announced that include:
- Monetary stability and full respect for the European regulatory framework must be preserved as a matter of priority.
- Italian banks are already operating on a Distributed ledger technology Dlt infrastructure with the Spunta project. They intend to be part of the change brought about by an important innovation such as digital coins.
- 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, in particular in terms of the efficiency of the operating and management processes. Hence the importance of dedicating attention and energy to develop, quickly and with the collaboration of all the ecosystem players, useful tools first of all for the development of the Euro area.
- Digital money needs to be fully trusted by citizens. To this end, it is essential that the highest standards of regulatory compliance, safety and supervision are adhered to.
- In particular, a Central Bank Digital Currency, thanks to the central role played by the Central Bank, represents the tool that more than any other can reconcile the needs for innovation, in line with the current framework of reference of rules, existing instruments and interoperability with the analog world. 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) which cannot be identified, characterized by an intrinsically higher risk profile.
- With the aim of fully expanding the transformative potential of these instruments, the possibility, at the moment of study, of issuing a European CBDC intended for the public, which could represent an evolution of cash, is of particular interest. Thanks to the role of the banks, it is possible to identify technical solutions and reference models to preserve the current characteristics of cash, while introducing many benefits of the digital world (already typical of electronic payment instruments), such as the possibility of not losing the own money and, in this period of strong attention to health risk, to operate in contactless mode.
- Detailed work will lead to the identification of the distribution, conservation and exchange model of digital currencies that best fits the customer’s service needs, to maintain the effectiveness of the monetary policy transmission mechanisms and regulatory compliance. Of course, in each of these objectives, the role of banks is crucial.
- Achieving high ease of use, while ensuring full interoperability between the digital and analog world and a total level of circularity between all the players in the ecosystem, represents a success factor in the diffusion of these tools.
- Particular attention must be paid, according to the technological choices that will be adopted, to the citizens’ personal data protection profiles.
- Projecting these reflections into the future, it is possible to affirm that the availability of a CBDC will enable a series of use cases of great interest: to favor the transmission of value between peers, thus also facilitating the logic of exchange between person and machine and between machine and machine; allow the settlement of cross-border peer-to-peer transactions, mitigating the interest rate, exchange rate and counterparty risk; Promote, thanks to the programmability characteristic of these currencies, the execution of exchanges when predefined conditions occur, ultimately reducing administrative processes.