December 6, 2023

Italy, South Korea Cooperate in Developing CBDCs

Italy, South Korea Cooperate in Developing CBDCs Featured Image

Italy’s Banca d’Italia and South Korea’s Bank of Korea have signed a memorandum of understanding to collaborate on developing central bank digital currencies (CBDCs) and other financial technologies.

The agreement aims to share knowledge and information related to real-time settlement systems and CBDCs. The general manager of Banca d’Italia, Luigi Federico Signorini, signed the agreement, highlighting Italy’s approach towards CBDCs, which involves leveraging distributed ledger technology to settle transactions through hash-linked contracts.

This approach favors interoperability over the wholesale CBDC approach adopted by other European nations.

Both Italy and South Korea have been exploring Central Bank Digital Currencies (CBDCs) over the past year but with different approaches.

In Italy, the central bank has been focusing on interoperability in its solutions for settling transactions based on Distributed Ledger Technology (DLT) via hash-linked contracts rather than a wholesale CBDC approach like other European countries.

On the other hand, South Korea started piloting its CBDC infrastructure technology in October, with both private banks and public institutions participating in the pilot. Technical support is being provided through the Bank for International Settlements. In November, South Korea announced that it plans to invite 100,000 citizens to test its CBDC beginning in 2024.

Although many governments are moving forward with plans to introduce CBDCs, there remains resolute opposition to digital currencies. In Europe, some politicians vehemently oppose the concept, citing privacy concerns.

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