The Bank of England decided to apply Proof-of-Concept (PoC) to understand how the updated real-time gross settlement (RTGS) can interact with Distributed Ledger Technology technology (DLT).
Such payment systems as real-time gross settlement systems are designed for funds to be transferred between banks in real-time and on a gross basis. RTGS systems are typically used for large amounts of transactions requiring instantaneous clearing and execution by the central bank of the country.
The Bank of England introduced the RTGS project in the May of 2017, claiming that the updated service will provide “a diverse and flexible range of settlement models”, which will give access to payment infrastructures to the money of the central bank. Then the bank announced its intention to develop a payment service that can function on the blockchain technology. However, the bank rejected this idea of a full transition to DLT due to the immaturity of the technology in its latest statement,.
The bank is planning to cooperate with such companies as Baton Systems, Clearmatics Technologies Ltd, R3 and Token, which are developing payment solutions using innovative technologies. The participants in the project will study the possibility of payment systems interaction on the basis of DLT with the updated RTGS service and look for ways to expand the functionality of the service. The bank plans to report the results of the experiment already at the end of this year.
The European Central Bank (ECB) and the Bank of Japan (BoJ) have presented the results of the investigation this week which concerned the blockchain potential in the area of securities settlement transformation.