The Bank of England (BoE) is rebuilding its Real Time Gross Settlement (RTGS) system to work with DLT, writes Cointelegraph.
BoE governor Mark Carney’s announcement was made during a speech at the Mansion House on 21 June, commenting that private business and platforms need to be able to work with the bank’s own RTGS system. RTGS is a system generally used to transfer large volumes of funds between banks.
In order to achieve these aims, the BoE needs to conduct what Carney called an “ambitious Build” in its current system, suggesting, “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.”
Another blockchain feature of the BoE’s new plans is an upgrade of inter-bank payments, which the UK’s central bank plans to achieve in tandem with the Bank of Canada, the Monetary Authority of Singapore and private sector financial organizations. The governor has suggested that these will include initiatives based on DLT:
“The potential returns are large. At present, cross-border payments can cost ten times more than domestic ones. We estimate that in the UK alone there is scope to realize annual savings of over GBP 600 million. Most fundamentally, the more seamless are global and domestic payments, the more UK households and businesses will benefit from the new global economy.”
A year ago, the BoA had rejected a proof-of-concept (PoC) using blockchain solutions within an RTGS renewal but had hoped that it could eventually improve the system through a DLT interface with it in the future. The newly announced rebuild, according to Governor Carney, will fight money laundering, financing of terrorism and improve access to financial systems.
The BoE has been looking at new technologies this year with a few to improving its services. In the past months, the bank has released a PoC on DLT configuration and also issued a working paper, detailing results of an extended inquiry into the possible financial risks and stability issues associated with CBDC.
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