The Bank of England (BoE), the UK’s Central Bank has been working on a completely new interbank payment system which will also support transaction processing across blockchain networks according to reports.
The BoE plans to carry out a complete overhaul of the system that supports banking and trading in Britain by 2020 in order to deploy better protection against cyber-attacks. The changes will also be aimed at making it easier for more businesses to operate the technology.
The banking system currently uses the Real-Time Gross Settlement (RTGS) system which facilitates more than 500 billion pounds worth of transactions a day. Blockchain has been flaunted as a superior technology that could be the next step for banking and remittance services. BOE announced a “proof of concept” in March this year.
Numerous firms including Clearmatics, R3, as well as Baton Systems and Token have been involved in testing to determine the changes that are necessary in order for the proposed overhaul to support blockchain technology. The firms were tasked with determining whether the revamped cloud-based RTGS service will allow interaction with systems that are based on decentralized ledger technology (DLT). The firms were also supposed to offer insights into how new technologies can be used to expand the functionality of the overhauled payments system.
“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 explained in its report which was released on Monday.
Cryptographic proofs suggested as a solution for enhanced performance
The report also noted that the firms involved in the testing had offered numerous suggestions for ensuring optimal access and performance. One of the suggestions was the adoption of “cryptographic proofs” to prevent the theft or manipulation of data. BoE’s Governor Mark Carney emphasized a month ago that the main feature of the overhauled payment system is to make it available to private payment systems including those carried out by blockchain firms.
What the changes mean according to Carney is that banks will not be the only organizations that will have access to the Central Bank. The announcement highlights the growing importance of blockchain technology and its future in the monetary system.