Layer-1 blockchain platform Algorand has been chosen as the public blockchain to support an “innovative digital guarantees platform” to be used in Italy’s banking and insurance markets, reports Cointelegraph.
The Algorand-supported platform is expected to launch in early 2023. According to Algorand’s announcement, this is the first time a European Union member state will use blockchain technology for bank and insurance guarantees.
A bank guarantee is when a lending institution promises to cover a loss if a borrower defaults on a loan. It’s an alternative to providing a security bond or a deposit to a supplier or vendor. An insurance guarantee is similar but is offered by an insurance company rather than a bank.
Algorand said that blockchain technology was ideally suited for the “digital sureties” platform because of its fast, efficient, low-cost and scalable data transactions, as well as its ability to provide protection against fraud.
The blockchain-backed digital sureties platform is being developed by the Research Center on Technologies, Innovation and Finance of the Catholic University of Milan (CETIF) and is a part of Italy’s National Recovery and Resilience Plan, an initiative set to boost Italy’s economic recovery following the COVID-19 crisis.