The Central Bank of Italy, Banca d'Italia, will participate in a financial innovation pilot project together with Polygon Network and Fireblocks.
The tokenization of assets is one of the most powerful use cases for blockchain technology, currently, and one of the most driving financial innovation among traditional institutions looking for new growth and business opportunities.
Likewise, decentralized finance, or DeFi, is also one of the most disruptive trends in the crypto/blockchain industry, becoming a broad ecosystem of decentralized applications and protocols that operate on the blockchain and offer users a wide range of financial products without the need for intermediaries.
These two great innovations are what Banca d'Italia, the Central Bank of Italy, will begin to explore together with two of the most prominent companies in the blockchain industry, Polygon Labs, which develops the second layer Ethereum blockchain Polygon Network and Fireblocks , which offers an institutional-grade platform for issuing and managing digital assets.
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“Institutional DeFi for Security Token”, Banca d'Italia's initiative in DeFi
According to a press release, the Central Bank of Italy will launch a blockchain ecosystem called Institutional DeFi for Security Token, from which it will help various financial institutions explore the advantages of asset tokenization and the decentralized financial ecosystem based on the blockchain, to issue security tokens and transact in DeFi.
This digital ecosystem will be managed by the central bank through the Milano Hub center for a period of 6 months, during which time it will evaluate the benefits and risks of participating in the crypto ecosystem, as well as the impact on the Italian financial system. The central entity hopes that this initiative will provide valuable lessons and experiences on the use of blockchain technology to improve inclusion and access to financial services for citizens and companies.
Milano Hub is a center promoted by the central bank in 2020 with the aim of creating a space for the generation and discussion of ideas focused on the open innovation of new digital finance.
Accelerating institutional entry into DeFi
Although the DeFi ecosystem has gained millions of users in recent years, financial institutions still face several obstacles to taking advantage of the potential it offers.
The main limitations that companies have to participate in DeFi are related to the lack of regulation, the scalability of the platforms and interoperability. Therefore, to overcome these obstacles, the Central Bank of Italy has selected a project that combines the experience and technology of Polygon Labs and Fireblocks to promote innovation and bring the public and private sector in the financial field closer to the new era of blockchain-based digital finance.
This project will focus on the tokenization of corporate bonds and money market securities, which will be issued in the form of digital tokens, which can be traded and settled on a private blockchain network based on Polygon.
On the other hand, project participants will use Fireblocks solutions to custody, transfer and manage the tokens, as well as to access the blockchain network.
The Central Bank of Italy has selected Polygon Labs and Fireblocks as technology partners for their extensive experience and solvency in the development of on-chain tokenized asset platforms.
Polygon Network Adoption Grows
In addition to Italy, other countries such as Mongolia and the Republic of Niger are exploring Polygon Network's network-based solutions, both to accelerate economic development and growth in their territories and to drive new government solutions and services.
Likewise, a large number of companies and brands, such as Gucci, Dolce & Gabbana, eBay, Mercedes-Benz, Associated Press, Starbucks, Instagram, among others, use the Polygon Network chain.
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