A revamped Bank of England (BoE) payments system is expected to connect with FinTech firms using distributed ledger technology (DLT). According to Reuters, the new plans will see the payments system, that supports British banking and trading, boost its defenses against cyberattacks by 2020, as well as increase the number of businesses that can use it.
The BoE's Real-Time Gross Settlement (RTGS) system handles transactions worth about 500 billion pounds — almost one-third of Britain’s annual economic output. In March, BoE announced a “proof of concept” with several firms to see what changes should be implemented to RTGS so that it may support settlement with firms that use blockchain.
As Berlin, Paris and other EU cities are trying to attract FinTech companies away from Britain, the U.K. wants to make sure it remains a leader in FinTech innovation by taking recommendations from companies in the industry.
“All participants confirmed that the functionality offered by the renewed RTGS service would enable their systems to connect and to achieve settlement in central bank money,” said the BoE in a statement. “A number of recommendations were received to ensure optimal access to central bank money.”
One recommendation will be to investigate if the revamped RTGS system could provide and use “cryptographic proofs” to stop data from being stolen or altered. In addition, "RTGS suffered a major outage in October 2014, and BoE Governor Mark Carney wants to make it easier for smaller firms to use the system directly," according to Reuters.
In addition, the U.K. is 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.
“RTGS is being rebuilt so that new private payment systems, including those using distributed ledger, can simply plug into our system,” stated Carney. “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.”