The Bank of England's updated payments system will be compatible with blockchain-based financial technology forms, Reuters reported Monday.
The announcement is the latest in the BoE's ongoing efforts to modernize its Real-Time Gross Settlement system (RTGS), which is essential for banking and trading in Britain and handles transactions worth around £500 billion annually, or almost a third of the country's economic output. The upgraded system is expected to be launched in 2020, and will be designed to be resistant to cyber-attacks while also being available to a wider number of smaller businesses.
This would enable these businesses to use the system directly, rather than through a proxy of a large bank.
In March, the BoE presented a "proof of concept," asking several firms, including payments technology providers Baton Systems and Token, R3 and Clearmatics, for feedback. They were asked to examine whether the "renewed" cloud-based RTGS service would be able to interact with systems based on distributed ledger technology (DLT) and how its functionality could be expanded through the use of new technologies.
"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 Monday. "A number of recommendations were received to ensure optimal access to central bank money."
One of those recommendations was to explore the possible use of "cryptographic proofs" to protect data from being stolen or altered.
Bank of England image via Shutterstock
Read more about
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.