Bank of England to Rebuild RTGS to Interface with Blockchain Platforms
The Governor of the Bank of England, Mark Carney announced on June 21 that they are planning to rebuild its Real Time Gross Settlement (RTGS) system so that it can interface with private business and platforms using distributed ledger technology (DLT).
RTGS is a system generally used to transfer large volumes of funds between banks. According to Carney RTGS system is the backbone of every payment in the U.K. While speaking about the Mansion House in London he said that the bank will conduct an ambitious rebuild of its RTGS system.
In order to plug private platforms directly into the bank’s system, the bank is looking to reorganize the existing RTGS.
“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”
The Governor also mentioned that the bank has begun working together with the Bank of Canada, the Monetary Authority of Singapore, and some private-sector organizations to upgrade inter-bank cross-border payments, including initiatives based on DLT.
He also said,
“The potential returns are large. At present, cross-border payments can cost ten times more than domestic ones. We estimate that in the U.K. alone there is scope to realize annual savings of over £600 million. Most fundamentally, the more seamless are global and domestic payments, the more U.K. households and businesses will benefit from the new global economy.”
Carney also said that the new system will help fight money laundering and financing of terrorism, as well as advance access to the domestic and international financial systems.
The RTGS renewal Proof-of-Concept (PoC) was initially proposed in May 2017. The bank then concluded that DLT was not yet sufficiently mature to provide the core for the next generation of RTGS, however, it placed a high priority on ensuring that the improvement of RTGS functionality is capable of interfacing with DLT.
In April, the Bank of England released a PoC paper that examines how to configure a distributed ledger system which would maintain privacy between participants, keep data shared across the network, and also enable a regulatory body to oversee all transactions. The central authority would have the power to issue and retire new units of assets and grant access permissions to all participants. No party other than the regulator would be able to infer details about transactions they are not a party to.
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