Italy’s central bank will use the proof-of-stake (PoS) blockchain to develop a digital sureties platform that will be used as part of the COVID-19 economic recovery plan to keep a tab on bank and insurance guarantees offered to the country by the EU.
The Bank of Italy and the Italian insurance authority (IVASS) has selected Layer-1 protocol Algorand (ALGO) to become the public blockchain that will support an “innovative digital guarantees platform” in Italy. In an event held in Milan on December 13, the company illustrated how banking and insurance guarantees can be issued on the distributed ledger technology (DLT).
The three-day forum hosted by the Research Center for Technologies, Innovations and Finance of the Catholic University of Milan – CETIF, was participated in by the Italian central bank, IVASS and more than thirty other financial institutions. The Advisory board of the CETIF has long been working on developing a blockchain-based ecosystemic “Digital Sureties” platform that will serve the purpose of Italy’s banking and insurance markets.
“We selected Algorand because of its unparalleled level of innovation and security among permissionless DLT’s (Distributed Ledger Technology), as well as because of its leadership in sustainability. Our goal is to help Italy not only recover from the economic impact of COVID-19, but also excel through innovation and leadership,” said Federico Rajola, Professor at CETIF.
Italy will be the first European Union (EU) member state to use blockchain technology for bank and insurance guarantees. The Algorand-powered platform is expected to be launched early next year. Algorand will also be the only network used by the Bank of Italy for digital sureties.
Bank guarantee is a promise made by a lending institution or bank to cover losses of a borrower in the case they default on a loan. Likewise, insurance guarantee is when the same security is offered by an insurance agent instead of a bank.
The blockchain-based digital sureties platform developed by the CETIF will be mainly used as part of Italy’s National Recovery and Resilience Plan (NRRP), which is part of the larger EU Recovery Plan that was launched following the COVID-19 crisis to boost economic growth across the bloc. The program, considered to be the most significant stimulus package in European history, can be used by the 24 member states for co-grants and co-loans to recover their economies. Italy was allocated roughly £172 billion (200 billion Euros) from the fund, which is the largest allocation made to any country by the EU.
“We are proud and honoured to be the public blockchain chosen by the Digital Sureties platform of Italy. Through Algorand’s technology, we can help solve many critical issues facing financial institutions and governments across the world today, bringing opportunity and inclusion to communities in need everywhere,” said Silvio Micali, Founder of Algorand.
CETIF will leverage Algorand’s fast, secure, efficient, low-cost and highly scalable blockchain to process transactions and protect against potential fraud which is a challenge that comes with bank and insurance guarantees.
In September, the pure-proof-of-stake (PPoS) blockchain upgraded its network to implement ‘State Proofs’ on the mainnet, enabling trustless interoperability between different blockchain protocols while improving transaction processing speeds that went from 1,200 to 6,000 transactions per second.
At the time of writing, ALGO is trading at $0.22 (£0.18), up by 3.8% in the last 24-hours. With 7.1 billion ALGO tokens currently in circulation, Algorand has a total market valuation of $1.5 billion.