Central Bank of Italy, SIA and two other Technological firms Partners in blockchain Surety Project
Three Italian technology firms SIA, Research Centre on Technology (CeTIF) and Reply have collaborated with Central bank of Italy for setting up a nationwide network of sureties or guarantees based on blockchain. SIA is known as the major supporter of Europe SEPA payments network. In the year 2018, it processed record break payment transactions as much as 3 billion along with 7.2 billion card transactions. Owing to the growing number of frauds in sureties which crossed € 1.6 billion losses in the last 4 years, compelled the SIA and Central bank to take preventive measures.
How do these Frauds happen?
Generally while applying for the tenders for the public sector projects, the supplier has to furnish e guarantee that they will abide by the contract as per the terms and conditions in the contract. Thus they involve banks and insurers and their guarantors. The fraudsters furnish the duplicate documents and receive the bank's guarantee.
How the Blockchain will fix the Surety
Integrating the blockchain technology in the system will bring legitimacy to the sector. The central bank of Italy has approved a list of guarantors plus other players like Italian insurance regulator IVASS are involved in the collaboration. All the sureties will be evaluated digitized and certified to legitimize the guarantor. The project will conduct a 4 months feasibility study that will involve the participation of the sector banks and corporations. The project will start this month and Fideiussioni Digitali (Digital Sureties) will be the sandbox network. This blockchain-based initiative is not the first time solution for the sureties. Earlier, Zurich and Accenture also had developed a blockchain-based back end surety bond system. In Australia, ANZ, IBM and Commonwealth Bank and Westpac had partnered with property firm Scentric Group to digitize bank guarantees.
More about SIA
SIA was founded in 1977 and it provides technology infrastructure solutions to financial firms, central banks, and public sectors. Operational in 50 plus countries, it offers, payments, cards, capital markets, and network market services.
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CBW - External Analyst