In an effort to create a more robust system for the sterling settlements of the United Kingdom, the Bank of England is exploring how it can integrate with distributed ledger technologies.
An official document surfacing from the Bank of England[1] (BoE) last week hints that the bank is taking a more open approach toward distributed ledger technologies (DLTs).
On March 27, the Bank of England published a proof of concept[2] outlining its vision for a renewed real time gross settlement (RTGS) service that could be integrated with a payments landscape in which DLTs are being rapidly adopted.
Although the BoE stands behind its 2017 conclusion – that distributed ledger technology is not yet "sufficiently mature[3]" – it states it places a "high priority on ensuring that the new service is capable of interfacing with DLT as and when it is developed in the wider sterling markets."
BoE has selected four companies – Baton Systems[4], Clearmatics Technologies Ltd[5], R3 and Token[6] – to develop a proof of concept. It will provide each company with a "cloud-based" system designed to replicate "a version of the prefunded net settlement arrangement a renewed RTGS service will offer to the major UK retail payment systems."
The BoE states that exploring potential solutions from multiple companies "will give broader insight into the range of functionality the Bank might need to offer to support this sector."
This follows a speech entitled The Future of Money[7] delivered by BoE Governor Mark Carney[8] to the Inaugural Scottish Economics Conference at the University of Edinburgh on March 2, in which he indicated that the bank is looking to the private sector to provide DLT architecture:
"Transactions that take nanoseconds to execute, currently take days to settle along a chain involving many intermediaries. At stake are the tens of billions of pounds of capital that are tied up while settlement completes. The best in the private sector are working hard unlocking this value. That's why the Bank is building the new RTGS so that new forms of securities settlement that meet our standards of resilience (including those using distributed ledger) will be able to plug in directly."
Findings from the proof of concept, including enhancements to settlement functionality, will be published at an unspecified date later this year.
Jordan Daniell is a full-time staff writer for ETHNews with a passionate interest in techno-social developments and cultural evolution. Jordan enjoys the outdoors, especially astronomy, and likes to play the bag pipes and explore southern California on foot in his spare time. Jordan lives in Los Angeles and holds value in Ether.
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