Bank of England Will Use Blockchain

Bank of England Blockchain

The Bank of England announced on Tuesday that it was researching ways to renew their Real Time Gross Settlement (RTGS) service with the use of Distributed Ledger Technology (DLT).

“The Bank of England has set out its vision for a renewed Real Time Gross Settlement (RTGS) 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,” states the Bank’s statement.

To achieve this, the Bank of England has chosen to use the DLT. Distributed Ledger Technology is a generic term used to describe a database (or ledger) that is distributed between the nodes of all users on the network.

The blockchain is considered the first functional Distributed Ledger Technology, but many other similar technologies have been created since. For example the IOTA Tangle is considered a DLT.

“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 built on DLT,” the document reads.

The Bank will partner with FinTech firms to helps them in their PoC.  Baton Systems, Clearmatics Technologies Ltd, R3 and Token will all be helping the bank achieve its objectives.

“Participants in the PoC have access to a cloud-based system developed by the Bank which replicates a version of the prefunded net settlement arrangement a renewed RTGS service will offer to the major UK retail payment systems.”

Later in 2018, the Bank of England will issue a summary of its findings. It will also accomplish ” any further work that needs to be undertaken in order to identify ways in which the renewed RTGS service functionality could be expanded.”

 

 

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