600-member Italian banking association begins digital euro experiment

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Europe’s largest national banking association has kicked off a digital euro experiment. The Associazione Bancaria Italiana (ABI) revealed that it will be studying the technical feasibility of a digital euro as well as what sets it apart from the existing payment methods.

The ABI is a voluntary banking association composed of close to 700 members, including banks and other financial intermediaries. In a recent press release, the association revealed that it had launched experiments with the digital euro, in partnership with its member banks. The initiative is meant to help Italian banks prepare for the eventual rollout of the state-backed digital currency, the ABI stated.

“The initiative aims to demonstrate the technical feasibility of a digital euro, based on a blockchain, i.e. on a system of distributed ledgers, in addition to exploring new value-added services which become possible thanks to the programmability of a digital currency.”

The project will be conducted in two phases. In the first, the ABI will be looking into the infrastructure and the distribution model of the digital euro, aiming to gauge its technical feasibility. In the second, it will evaluate how the currency’s programmable nature could bring on new use cases that differentiate it from the existing electronic payment methods.

The ABI will partner with several tech companies, including Italian banking tech giant SIA S.p.A, consulting firm Reply, Japanese system integration firm NTT Data and Big Four audit firm PricewaterhouseCoopers.

In its press release, the ABI pointed to the rapid interest that CBDCs have received in 2020 as a key factor in its decision to kick off the experiment. The year has seen some countries launch their CBDCs, including the Bahamas and Cambodia. Other nations have also stepped up their efforts as they seek a near future launch, led by China.

In Europe, the European Central Bank has been actively researching CBDCs as well. As CoinGeek reported, ECB President Christine Lagarde predicted a digital euro launch in 2-4 years. The bank launched a consultation in October that it will complete in mid-January 2021 studying the implications of a digital euro. The results of this consultation will guide the ECB’s decision on whether to issue the digital euro.

In its report a month prior, the bank stated that European central banks should be ready to issue a digital euro, whether in a centralized or decentralized model.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.

See also: CoinGeek Live panel, The Future of Banking, Financial Products & Blockchain