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Next-Gen UK Payments System Will be Blockchain Compatible: BOE Governor

Last Updated October 2, 2020 5:20 PM
Samburaj Das
Last Updated October 2, 2020 5:20 PM

The governor of the Bank of England, the UK’s central bank, has revealed that an upcoming version of the UK’s main interbank payments system will be compatible for settlements in a distributed ledger, commonly known as a blockchain.

BOE governor Mark Carney was speaking at this year’s International Fintech Conference in London today. The official confirmed the development of the central bank’s own proof-of-concept ledger, to “distinguish distributed ledger’s potential from its hype,” Carney explained.

In September, the Bank of England released a paper that revealed its endeavor to explore advances in the next generation of its real-time gross settlement (RTGS) system, with blockchain technology.

The UK’s banking system sees the Bank of England perform its role as the settlement agent via its RTGS platform and processes £1/2 trillion of payments from commercial, regional, and international banking. The current RTGS system only extends to 52 institutions with settlement accounts in the UK’s interbank payments platform.

In his speech today, Carney underlines the potential of distributed ledger technology, or blockchain tech, to revolutionize core banking processes.

He stated:

New technologies could transform wholesale payments, clearing and settlement. In particular, distributed ledger technology could yield significant gains in the accuracy, efficiency and security of such processes, saving tens of billions of pounds of bank capital and significantly improving the resilience of the system.

Securities settlement, in particular, are highlighted for being “particularly ripe for innovation”.

Bank of England
An upcoming version of the Bank of England’s interbank payments system will be compatible for settlements with blockchain technology.

Putting a pin on the central bank’s own PoC and other blockchain-related initiatives, Carney notably added:

We are a member of Hyperledger along with private market participants and tech firms. And we will make our next generation RTGS compatible with settlement in a distributed ledger.

The Bank of England joined the Linux Foundation-led open-source Hyperledger blockchain collective earlier this year, joining over a hundred other corporations, banks, automobile manufacturers, and financial institutions, among others, to collaborate over blockchain development compatible across industries.

Mark Carney will step down as BoE governor in 2019.

Images from Shutterstock.