The Bank of England (BoE) announced on Monday that distributed ledger technology firms should be able to connect to its renewed Real-Time Gross Settlement (RTGS) system.
The BoE in March launched a Proof of Concept with Baton Systems, Clearmatics Technologies Ltd, R3 and Token to understand how its RTGS system could support settlement in networks operating on DLT and other innovative payment solutions. Yesterday, the central bank provided an update on its findings.
“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,” the BoE said in a statement. “A number of recommendations were received to ensure optimal access to central bank money,” the bank added.
One such recommendation is for the bank to consider how different account structures could be used in the RTGS system. Some of the participants in the PoC highlighted the benefits of adopting a more flexible approach to account structure, in order to cater to new settlement models being developed.
The BoE will also investigate if the revamped RTGS system could provide and use cryptographic proofs that are used to ensure trust in systems and between parties. Cryptographic proofs can be used for user authentication and to protect data from being stolen or altered. The central bank said that cryptographic proofs would not be available in the early phase of the RTGS renewal programme, but it would explore how this functionality cold fit into the design of the system. It added that it would monitor changes in methodologies and evolving technology for cryptographic proofs.
“Participants also highlighted the importance of continued engagement with Fintech firms, noting the need for the Bank to continue to keep pace with developments in technology and payment system innovation,” the BoE said, adding that it intended to take the recommendation into account.