The “assegno circolare” it’s a cheque issued by a bank that guarantees the payment of a specific amount and the bank will issue it only if are their account holder and you have a deposit that covers the amount.
The recipient of the cheque can cash it immediately, because the money is already guaranteed by the bank.
How it works
The person requesting the cheque to the bank has to be an account holder.
When a bank account holder request a cashier’s cheque (assegno circolare), the bank blocks the amount in the account, as if setting it aside to pay the recipient.
This way, the bank account holder can no longer spend the money, and the bank holds it ready for payment.
Why it’s safe?
The money is already set aside: there’s no risk of the cheque being bounced due to lack of funds.
The cheque is made out to a specific person i.e the property owner, so only that person can cash it.
Practical example: Real estate purchase proposal
The cashier’s cheque is made out to the owner of the property.
The real estate agent holds it in custody, but cannot cash it in because it is not in his or her name.
The agent delivers it to the owner only after the deal is finalized, after receiving the buyer’s approval.