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The Bank of England begins its Proof of Concept (PoC) to examine its potential in RTGS functionality through to the decentralized blockchain technology. Offering a resilient, robust and innovative system for the UK, PoC serves as a response to changes in the financial technology industry.
The Bank seeks to protect financial stability while adopting innovation while keeping data integrity at the heart of the problem. The real-time gross settlement (RTGS) handles nearly a quarter of the UK’s annual GDP on average per day and must be able to continue to meet user demand.
After publishing a renewed vision of RTGS last May, this PoC is part of the bank’s strategic plan for 2020, which will see “good technology at the heart”.
The vision also includes an outward-oriented API and an increase in the number of companies that can directly access the RTGS for settlement of payment streams.
Proof of concept
The BOE opens up for external evaluation, seeking solutions for blockchain / cryptocurrency system integration and capacity for new technologies.
With the acceleration of distributed register technology, the Bank of England is now working on RTGS navigation through cooperation with Clearmatics Technologies Ltd., Token, R3 and Baton Systems. A larger overview will be provided to the bank, with several companies involved. The four companies have access to a replica of a pre-funded settlement service for British retailers.
Learning to support the settlement once DLT is deemed “mature enough” for the sterling markets is the goal. In addition, see if the innovative regulations will be able to function properly in the RTGS, and how the functionality can be extended.
History of the Bank of England with Blockchain Technology
In 2016, referring to DLT, the Bank’s Executive Director for Banks, Payments and Financial Resilience, Andrew Hauser, said: “It is unlikely that such an extreme revolution will occur from so early”. ]
Yet, in May 2017, the bank offered an RTGS plan for services for different settlement models. Regardless of the executive declarations presented the previous year, the need to include the new payment systems was clear.
The findings of the Bank of England proof of concept are expected to be published later in the year, including the possibilities for extending the functionalities and the steps necessary for the implementation. .
Time will tell how the bank will adapt to the results and what it will offer in terms of DLT innovation … and when.
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