The Bank of England is Testing Blockchain Technology

on April 6, 2018 at 11:50 am

Last week, The Bank of England said that it’s currently working on a “proof of concept” to see if its real-time gross settlement (RTGS) service will benefit from blockchain technology. The bank’s governor, Mark Carney, revealed the plans in April 2017, saying that securities settlements need innovation, and blockchain technology.

Real Time Gross Settlement systems are special payment systems where the transfer of funds is conducted between banks in “real time” and on a “gross basis”. This means that transactions are settled as soon as they are processed on a one-to-one basis without linking with any other transaction. RTGS systems are usually used for high-value transactions requiring instant clearing and operated by a country’s central bank.

“Although the Bank has concluded that Distributed Ledger Technology (DLT) is not yet sufficiently mature to provide the core for the next generation of RTGS, it places a high priority on ensuring that the new service is capable of interfacing with DLT as and when it is developed in the wider sterling markets,” the Bank of England reports.

The UK bank will cooperate with companies such as Baton Systems, Clearmatics Technologies Ltd, R3, and Token, which develop payment solutions using innovative technologies. It will also aim to pinpoint ways in which the service’s “functionality could be expanded” through the use of new technologies.

The Bank of England will publish a summary of its proof of concept findings laterin 2018.