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Algorand to support Italy’s banking and insurance guarantee platform

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The Algorand Layer-1 blockchain platform has been selected as the public blockchain to support an “innovative digital collateral platform” for use in the insurance and banking markets in Italy.

The Algorand-supported platform is expected to be launched in early 2023. According to Algorand on December 13 AdvertisingThis is the first time that a member state of the European Union has used blockchain technology for bank and insurance guarantees.

A bank guarantee is when a lending institution undertakes to cover a loss if a borrower defaults on a loan. It is an alternative to making a surety bond or deposit to a supplier or vendor. An insurance guarantee is similar but provided by an insurance company, not a bank.

Algorand said that blockchain technology is ideally suited to a “digital collateral” platform because of its fast, efficient, low-cost, and scalable data transactions, and its ability to provide protection against fraud.

The blockchain-enabled digital collateral platform is being developed by the Center for Research on Technologies, Innovation and Finance of the Catholic University of Milan (CETIF) and is part of the Italian National Recovery and Resilience Plan (NRRP), an initiative aimed at boosting Italy’s economic recovery after the COVID-19 crisis.

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Federico Rajula, a professor at CETIF, said they chose Algorand for its “unmatched level of innovation” among unlicensed DLTs and its “leadership in sustainability,” adding:

Our goal is to help Italy not only recover from the economic impact of Covid-19, but also stand out through innovation and leadership. […] We believe that these platforms can and will contribute significantly to the competitive sustainability of the country for the benefit of all.”

In September, Cointelegraph reported that Algorand increased its transaction speed, processing capacity, and cross-chain functionality using Major protocol upgrade. The blockchain network has implemented Layer 1 State Proofs on its mainnet, enabling untrusted communication between different blockchain protocols. The upgrade increased Algorand’s processing speed from 1,200 to 6,000 transactions per second.