The Bank of England has followed in the footsteps of many other leading institutions, by announcing that they are considering utilising Distributed Ledger Technology to aid its operational efficiency.
“The Bank of England has set out its vision for a renewed Real Time Gross Settlement service that will deliver a materially stronger, more resilient, flexible, and innovative sterling settlement system for the United Kingdom to respond to the rapidly changing payments landscape,” said the Bank in a statement.
Distributed Ledger Technology or DLT is a term that is used to describe a database or a ledger that is updated and then distributed throughout all the nodes of users on the particular network. There are several favourite examples of this technology already being used, such as the blockchain, and the IOTA Tangle.
The statement continued, “The Bank is undertaking a Proof of Concept (PoC) to understand how a renewed RTGS service could be capable of supporting settlement in systems operating on innovative payment technologies, such as those build on DLT.”
The Bank aims to build partnerships with leading FinTech firms such as Baton Systems, Clearmatics Technologies LTD, R3 and Token, to receive professional guidance and assistance with their PoC.
“Participants in the PoC have access to a cloud-based system developed by the Bank which replicates a version of the pre-funded net settlement arrangement a renewed RTGS service will offer to the major UK retail payment systems.”
Towards the end of 2018, the Bank of England is planning to issue a summary of its findings which will also help them to identify any additional work that needs to be undertaken to understand how the RTGS service functionality can be developed and expanded.
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