Bank of England Aims to Integrate Blockchain Technology with the RTGS Payment System
Different banks and financial institutions are using blockchain technology in order to improve their services and security. The Bank of England is working in order to integrate distributed ledger technology (DLT) with the Real Time Gross Settlement (RTGS) system.
Mr. Mark Carney, Bank of England Governor, released a statement on June the 21st in which he informs that the bank is integrating blockchain technology with the RTGS platform. This move would allow the RTGS system to ‘interface with private businesses.’
Moreover, he has also stated that the bank aims to initiate a ‘rebuild’ of the platform, which is the backbone of financial transactions in the United Kingdom.
And indeed, the integration with blockchain technology is expected to reduce cross-border payments and start to save money by cutting costs.
About this, Mr. Mark Carney 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 GBP 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.”
The RTGS works by facilitating interbank transfers. But more important, the bank moves important sums of money and funds, and transacting them could be easier and cheaper with distributed ledger technology. Additionally, the new infrastructure build around new technology will open doors to potential innovations.
“Our new, hard infrastructure will be future – proofed to your imaginations, opening up a range of potential innovations in the wholesale markets, and corporate banking and retail services,” Mr. Carney explained.
But this is not all. The bank will be also working with other entities from all over the world, including Canada’s central bank and the Monetary Authority of Singapore. Other companies that were not named are also helping developing a highly functional blockchain system for cross-border payments.
Back in March, Mark Carney said that the FSB’s initial assessment is that crypto-assets do not pose risks to global financial stability. Other central banks are also working with distributed ledger technology including JP Morgan or Santander Group.