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Bank of England Building Payments Network to Support a Potential Digital Pound

CoinDesk has learned the Bank of England's new settlement system is being built so it can be forwards compatible with a digital currency.

By Paddy Baker
AccessTimeIconJul 30, 2020 at 2:13 p.m. UTC
Updated Sep 14, 2021 at 9:38 a.m. UTC
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(Shutterstock)
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The Bank of England's upcoming settlement service is being designed to support a possible central bank digital currency (CBDC).

  • CoinDesk has learned the BoE will ensure its redesigned real-time gross settlement service (RTGS), the payments network used by U.K. financial institutions, can be forwards compatible with CBDCs, such as a digital pound.
  • The new settlements system is being designed that the bank could "bolt on" a facility for digital currency transactions, should it decide to support a CBDC.
  • Modules for other future capabilities, as well as the digital pound, are also being considered for the upcoming settlement system.
  • RTGS is a key component in the U.K.'s financial infrastructure – it's where institutions hold their sterling accounts and acts as the main channel for the BoE to inject liquidity into the economy.
  • On average, RTGS settles more than £685 billion ($900 billion) worth of transactions each working day.
  • The BoE announced Thursday it had chosen Irish tech consultancy firm Accenture for a £150 million ($195 million) contract to redesign the payments network.
  • In a statement, Accenture said the new RTGS system would adapt to the changing financial system by providing access to more firms, as well as greater interoperability and functionality.
  • The new RTGS system is expected to go live in 2022.
  • Earlier this month, BoE Governor Andrew Bailey said the 400-year-old central bank was seriously considering whether to launch a CBDC.
  • Officials have previously said the BoE was open to the idea of private companies having a greater role in the issuance of a digital pound, insofar that they stick to the bank's design and policy principles.

See also: Canada’s Central Bank Is Serious About Designing a CBDC, Job Posting Reveals

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