The Bank of England has released new details about a proof-of-concept it has developed in partnership with distributed ledger startup Ripple.
Among several fintech proofs-of-concept revealed by the UK central bank yesterday, one test involved Ripple's Interledger protocol, designed to facilitate transactions between different distributed ledger systems.
The trial centered on a cross-border payment scenario in which "two different currencies" were "executed simultaneously in two different simulated RTGS [real-time gross settlement] systems," with blockchain potentially serving as means for synchronizing the settlement of transactions.
According to its outline of the proof-of-concept, the Bank of England used the test in part as a springboard to investigate issues around liquidity, stating:
"Cross-border payments when applied to wholesale markets present different challenges than when compared with retail and corporate transactions, which the Ripple product is designed to handle. The availability of liquidity is one such challenge, and the PoC allowed the Bank and Ripple to begin exploring these questions."
The bank went on to indicate that it could conduct additional trials in this area "to extend its understanding of the dimensions of the synchronization concept."
The Bank of England launched its fintech startup accelerator last year as part of a bid to test new technologies including blockchain, and has been trialing solutions for months. While it has stopped short of green lighting any immediate plans to replace any of its internal infrastructure, the bank is planning for its next RTGS system to be compatible with the tech.
Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Ripple.
Bank of England image via Shutterstock