The update to the 20-year-old bank-to-bank settlement service is to take into account new technologies such as blockchain ledgers
The Bank of England is aiming to deliver a “comprehensive” rebuild of its core payment system by 2020, as it seeks to take into account rapid shifts in payment technologies, including distributed ledgers of the kind popularised by Bitcoin.
The bank said it would publish a timetable for the update to its 20-year-old Real-Time Gross Settlement (RTGS) service next year, with a provisional date for delivering the platform’s successor in four years’ time.
‘Now is the time’
The announcement follows the launch of a consultation in January, to which stakeholders responded that “now was the right time” for a next-generation RTGS, the bank said.
The platform is the Bank of England’s system for handling bank-to-bank payments, and on an average day it processes around £500bn, or nearly one-third of the UK’s annual gross domestic product.
The bank said ensuring stability remains its main objective, but it is also seeking to enable new technologies and competition where possible.
“Our proposals are intended to provide broader access, higher resilience, greater interoperability, and a wider range of user functionality compared to the RTGS of today,” the bank stated.
The key requirements for the new platform that emerged from the consultation included the ability to respond to the financial system’s changing structure, simpler and more resilient pathways for payments, support for interaction with new technologies including distributed ledgers, continued resilience and support for future regulatory and monetary policy tools, the bank said.
The stakeholders consulted included current and potential future users, authorities, payment system operators, analysts and public interest groups.
The bank said it plans to consult with intelligence services on the new RTGS’ defences.
“Taken together with prospective reforms to retail payments underway in the industry, these changes are designed to keep the UK payments infrastructure at the leading edge globally whilst underscoring our commitment to maintaining stability and confidence,” stated Andrew Hauser, the bank’s executive director for banking, payments and financial resilience.
The full set of proposals is detailed in the consultation document, availalble on the bank’s website.
In June the bank announced a partnership with professional services giant PriceWaterhouseCoopers (PwC) to test a blockchain proof-of-concept.
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