Italy has chosen the Algorand blockchain to bring about improvements in the existing banking systems starting in 2023. With this, Italy will officially become the first member nation of the European Union (EU) to mix blockchain with its financial and insurance systems. The blockchain technology, that also makes for the underlying technoloy used by cryptocurrencies, is now being examined by several countries to increase transparency in the banking sector.
Essentially, Algorand will support an upcoming digital guarantees platform in Italy to issue bank and insurance guarantees on blockchain, which is a digital ledger technology (DLT).
Insurance or bank guarantees are commodities promised by banks or insurance firms to mitigate losses in case of a loan default. A blockchain twist to the issuance of these guarantees could make the records more immutable, and hence more transparent.
“Our goal is to help Italy not only recover from the economic impact of COVID-19, but also excel through innovation and leadership. Our ecosystemic projects are meant to help generate strategic platforms supported by Algorand. We selected Algorand because of its unparalleled level of security among permissionless DLTs, and because of its sustainability,” said Federico Rajola, Professor at the Research Center on Technologies, Innovation and Finance of the Catholic University of Milan (CETIF) in a press release.
Members from Algorand, the Bank of Italy, and the Italian insurance authority IVASS met in Milan this week to discuss the use-cases of blockchain in the banking sector. Over 30 financial organisations were also part of this meeting. The official Twitter handle of the Layer-1 blockchain platform announced this development on Tuesday.
Earlier this year, Italy’s Ministry of Economic Development planned to invest $46 million (roughly Rs. 360 crore) in subsidies for developing projects around blockchain technology as well as Artificial Intelligence (AI), and Internet of Things (IoT).
This month, Italy proposed a draft crypto law bill that would allow the country to levy a 26 percent tax on crypto profits exceeding over $2,000 (roughly Rs. 1.62 lakh).
Italy’s Algorand-supported platform is expected to come into existence in 2023.
Released in 2019, Algorand is a green, proof-of-stake (PoS) blockchain. The developers of the blockchain claim to enable the convergence between decentralised finance (DeFi) and traditional finance.
Recently, the blockchain was also chosen by the Maharashtra government in India to store and support health data as NFTs.