England’s central bank is taking a significant step in support of blockchain technology with a decision to open its real-time gross settlement (RTGS) system to distributed ledger networks.
Reports in Cointelegraph said the Bank of England (BofE) will rebuild the RTGS system to be able to interface with other platforms created on blockchain technology. The plans were revealed in a speech by BofE Governor Mark Carney, which was delivered last week.
“RTGS is being rebuilt so that new private payment systems, including those using distributed ledger, can simply plug into our system,” he stated. “Our new, hard infrastructure will be future-proofed to your imaginations, opening up a range of potential innovations in wholesale markets and corporate banking and retail services.”
The U.K. is also working with the Bank of Canada, the Monetary Authority of Singapore and members of the private sector to develop more efficient interbank cross-border payments, including transactions using blockchain.
“The potential returns are large,” said Carney. “At present, cross-border payments can cost 10 times more than domestic ones.”
He added that the central bank estimates U.K. payers can save nearly $800 million a year with enhanced global payment capabilities.
According to the publication, the Bank of England first proposed a proof-of-concept (PoC) to open its RTGS system in May 2017. At the time, however, the central bank determined that blockchain was “not yet sufficiently mature to provide the core for the next generation of RTGS,” although it did acknowledge that the PoC would support integrating with blockchain-based platforms.
The Bank of England is in the midst of consolidating various payment schemes under a single entity, the New Payment System Operator. Last month, the nation’s Bacs and Faster Payments schemes were consolidated and will soon include its Cheque and Credit Clearing Company system.
Payment Systems Regulator Managing Director Hannah Nixon described the consolidation as a “start of a generational change” for the nation’s payment system.