YEREVAN (CoinCahapter.com) — Italy and South Korea have recently agreed to cooperate on the development and deployment of Central Bank Digital Currencies (CBDCs). This collaboration is marked by a memorandum of understanding (MoU) between Banca d’Italia, Italy’s central bank, and the Bank of Korea. The MoU focuses on the mutual sharing of knowledge and information, particularly regarding information and communication technology (ICT) issues related to real-time settlement systems and CBDCs.
Italy and South Korea Prepare to Jump on the CBDC Bandwagon
Over the past year, both countries have been actively exploring CBDCs, albeit with differing approaches. In Italy, the central bank’s focus has been on interoperability solutions for settling transactions using distributed ledger technology (DLT) through hash-linked contracts.
This approach differs from the wholesale CBDC strategy employed by some other European countries. South Korea, on the other hand, started piloting its CBDC infrastructure technology in October, involving both private banks and public institutions.
The Bank for International Settlements technically supports the pilot. Furthermore, South Korea plans to expand this initiative by inviting 100,000 citizens to test its CBDC starting in 2024.
The partnership between Italy and South Korea underscores the growing trend of international cooperation in the field of digital currency, as nations seek to learn from each other’s experiences and expertise in this rapidly evolving area. Meanwhile, the two countries join the wider CBDC community.
Europe Forays Into Central Bank Cryptos
So far in 2023, twelve countries have started exploring blockchain technology, bringing the so-called “curious” bunch of CBDC wannabes to 131.
The European Central Bank (ECB) has moved into a preparation phase for a digital euro while underscoring offline capabilities, high privacy, and instant settlements. Considering macroeconomic challenges like energy dependence and inflation, the digital euro could be a step toward economic resilience.
For example, The Swiss National Bank (SNB) said last month that it was working on a wholesale CBDC pilot alongside the SIX Digital Exchange (SDX) and six commercial banks.
Latin America and Asia-Pacific jump on the bandwagon
Argentina is exploring a CBDC to mitigate economic instability and rampant inflation.
With an economy expected to contract by 1.6% in 2023, according to Reuters, a digital currency could offer a new economic lever. Brazil, on the other hand, is developing the digital real (DREX) for a planned launch in May 2024, underscoring the importance of privacy and infrastructure.
Similarly, the Reserve Bank of Australia and several commercial banks collaborated on a CBDC blockchain pilot in 2023.
China, a front-runner in CBDCs, completed its first international crude oil trade using the digital yuan before Italy and South Korea’s CBDC foray, showcasing its digital currency’s global applicability. The Indian economy joined in as well, setting targets for daily transactions with its CBDC.
Meanwhile, Japan is piloting a digital yen, aligning with its modest economic growth forecasts. Nepal also plans to develop a CBDC despite its restrictive stance on cryptocurrencies.
