By
Chimamanda U. Martha
April 24th, 2024
The Italian Banking Association (ABI) voiced its desire to develop a European Central Bank-backed digital currency for Italy. This way the banks want to boost Italy’s financial and economic ecosystems.
When cryptocurrencies debuted through Bitcoin (BTC) in 2009, many country’s Central Banks or Monetary Authorities saw a threat in the digital currency. The threat stems from its potential to facilitate pseudo-anonymous transactions which can boost crime as well as regulatory concerns. This paranoia stirred strict regulations that limited the growth of the coin in some countries, but despite the harsh embargoes laid, the adoption and integration of cryptocurrencies have grown and the narrative is changing. Seeing the new wave, The Italian Banking Association (ABI) is encouraging the creation of their own digital currencies to help retain the value of the Euro.
The Italian Banking Association (ABI) consisting of about 700 banking associations believes the development of a Digital Euro could revolutionize the financial system.
Possible Coalition to Work on Digital Euro
In 2019, the ABI set up a working group to research digital currencies and assets. Italy’s presence in the digital currency landscape is trailing that of France and Germany but set to overtake with its Spunta Project. The ABI shared 10 considerations while making its interest known, these considerations including ensuring “monetary stability and full compliance with the European regulatory framework must be preserved as a matter of priority.”
Highlighting the benefits of digital currency, the group noted:
“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”.
More Ways Italy Can Benefits from CBDC
The development of a central bank digital currency can help position the country to have good oversight over the digital landscape in the country. The currency through its functionalities can make the financial system safer as well as removing the hassles associated with core monetary transactions such as money transfers.
Digital currencies can also help achieve a completely cashless economy which from the turn of events will be most suited to reduce or eliminate the cost of producing fiat currencies. Highlighting the benefits of a CBDC, Michael Bordo, a professor of economics at Rutgers University writes:
“Households and businesses would be able to plan with confidence that the cost of a representative basket of consumer items (as measured in terms of CBDC) would be stable over the medium run and roughly constant at planning horizons of 5, 10, 20, and even 50 years into the future. This stability could be particularly beneficial for low-income households and small businesses, which typically have little or no access to sophisticated financial planning advice or complex financial instruments to insure against risks”.
With all that has been highlighted, Italy through the decision of the ABI to pilot digital currencies is on the right path for a renewed economy.