Bank of England Plans a Complete Overhaul Of Its Inter-Bank Payment System Using Blockchain

The U.K’s Central Bank - Bank of England (BoE) is currently working on a complete revamp of its inter-bank payment system using the blockchain technology. The Bank of England announced that its new blockchain-based payment network will be open to fintech firms who can process transactions across the blockchain network.

On Monday, the central bank published a report to evaluate its Proof-of-Concept (PoC) against that of several fintech firms operations in the country’s booming blockchain industry. The test was basically intended towards assessing the feasibility of interlinking blockchains firms to the bank’s recently updated Real-Time Gross Settlement (RTGS) service.

This RTGS facility is expected to handle transactions worth 500 billion pounds which is equal to one-fourth of the country’s gross domestic product (GDP) approximately. Back in March 2018, WorldCoinIndex reported that the central bank is already working on a blockchain solution for its revamped RTGS payment settlement system.

Moreover, the Bank of England (BoE) had a huge pressure of trying the new blockchain-based payment system due to the country’s booming fintech market that uses the Distributed Ledger Technology (DLT).

Last month, BoE governor Mark Carney announced a core feature of the central bank’s RTGS payment system that was made open to DLT startups and other private payment systems. Carney said: “No longer will access to central bank money be the exclusive preserve of banks.”

To test its revamped RTGS system, the Central bank has tied up with several DLT startups like  R3, Baton Systems, Token and Clearmatics Technologies. The newly published report shows that all these participants have expressed confidence and were easily able to connect to the banks RTGS systems for transaction settlements.

The statement from BoE reads: “All participants confirmed that the functionality offered by the renewed RTGS service would enable their systems to connect and to achieve a settlement in central bank money. A number of recommendations were received to ensure optimal access to central bank money.”

The BoE further added that its officials would also look into “whether the renewed RTGS service could provide and consume acceptable forms of cryptographic proofs.” In the next two years by 2020, the central bank is also planning to introduce a future-proof system that can provide access to all the businesses operating in the country with an ability to combat the cyber-attacks.

Last week, a report from the international publication The Guardian also suggested that the United Kingdom will emerge as a formidable player in the blockchain space due to multiple initiatives that were taken by its government and local businesses from the fintech space.