Italy Launches a Pilot to Assess the Viability of CBDCs

Italy just became the newest country to enter the CBDC race by launching its own central bank digital currency pilot program. The program was actually launched by the Bank of Italy, and its goal is to assess the viability of CBDCs.

Italy to test the impact of a CBDC

The pilot was named Project Leonidas, and it involves a collective of 18 commercial banks that operate in the country. Alongside them is ABI, or Associazione Bancaria Italiana. According to the group of banks, the objective is to “explore blockchain applications that promote financial stability and protect consumers.”

The joint banks will all use the same shared ledger in order to conduct interbank payments. This will help them with streamlining the process, while the banks will monitor the performance, and record potential implications.

Interestingly, this is not the first CBDC pilot with which the ABI was involved. The association was previously involved with the launch of the Spunta project, which took place roughly three years ago. The project was on a much larger scale than Project Leonidas, with more than 100 banks participating at the time. They also had a shared ledger for interbank payment reconciliations.

While a significant news for Italy, Project Leonidas is not the only CBDC pilot that is currently underway in Europe. Several others are in different stages of testing right now, with the most recent one involving the Bank of England as well as the Bank of International Settlements.

Central banks continue to pursue their own CBDCs

The idea of using CBDCs has been on the mind of many central banks around the world ever since China emerged with the idea of launching a CBDC of its own. At first, many reacted with their own CBDC programs, fearing China taking over the global financial industry with a superior product.

However, many of the banks also noticed that a CBDC could bring a number of potential benefits. Some countries researched it and then determined that there is no need for a CBDC that would be utilized in their nation. Others feared that CBDCs could disrupt the local economy, while some decided that a CBDC could help their economy advance.

In the end, there were as many opinions and conclusions as there were central banks looking into the new form of money.

Now, with its new project, the Bank of Italy illustrated its dedication to embracing technological advancements and adequately adjusting its policies. If it concludes that the new system could lead to increased efficiency and reduced transaction time, it might decide to start implementing it in years to come.

For now, the Bank’s representative stated: “With the launch of Project Leonidas, we’re diving into the digital future, aiming to explore how blockchain can promote financial stability and protect consumers.”