The Bank of England (BoE) has concluded its Proof of Concept (PoC) project that sought to make a better understanding of how a newly-established Real Time Gross Settlement (RTGS) service can meet new financial challenges that emerge in a “rapidly changing landscape”.
Preparing for the future
It is a bid to revamp banking and trading systems in the United Kingdom with innovative payment technologies such as those built on Distributed Ledger Technology (DLT). The BoE announced on 27 March that it would be running the PoC in collaboration with Baton Systems, Clearmatics, R3 and Token.
A “renewed” RTGS service is intended to respond to the ever-evolving structure of the financial system, which, in the advent of blockchain, cryptocurrencies and the Digital Economy 2.0, is moving at an accelerating pace.
The RTGS project was designed to “meet user demand for simpler and more resilient payment pathways, build capacity to interface with new payment technologies as adoption increases, ensure continued resilience in the face of evolving threats such as cyber-attacks, and support the evolution of regulatory and monetary policy tools”.
The report wrote that all participants in the project confirmed that this new functionality offered by the renewed service enabled systems to connect and “achieve settlement in central bank money”.
The BoE, G20 and Mark Carney
The BoE has retained a rather bullish stance on blockchain technology. In May 2018, the bank published its findings on the possibilities of Central Bank Digital Currencies (CBDCs), the report found them to not only but feasible but also prompted the BoE to suggest three models on which they could be rolled out on.
The bank’s governor, Mark Carney, has been open-minded on the possibility of a CBDC which carries great significance given that he is also chairman of the G20’s Financial Stability Board (FSB).
Recently, the FSB made offerings to provide “counsel” on crypto-asset frameworks, and the challenges that traditional financial institutions will face as blockchain disrupts these spaces.
Carney, who was previously skeptical on cryptocurrencies, is seemingly adjusting his stance as evidence of blockchain benefits emerges.
UK blockchain hub
Last month, he reiterated the purpose of RTGS project during a 21 June speech, outlining the significance of the “ambitious rebuild” saying, “RTGS is being re-built so that new private payment systems, including those using distributed ledger, can simply plug into our system. Our new, hard infrastructure will be future-proofed to your imaginations, opening up a range of potential innovations in wholesale markets, and corporate banking and retail services.”
A 960 –page analysis regarding the UK’s potential to lead the global blockchain space was recently released. It indicated the nation’s latent capacity to dominate the field and that it’s not far away from achieving that should it mobilize itself appropriately.
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