Life in jolly ‘ole England has been quite turbulent over the past year or so, culminating with the epic Brexit vote this summer, changing the way the nation will do business forever more. This appears to be only the first step in their upgrades for future business initiatives, as the Bank of England has decided to revamp their financial services settlement system to include innovations like Bitcoin’s Blockchain technology.
Bank of England wants to be more inclusive and more compatible
The Bank of England has scheduled a redesign of their RTGS (Real-time Gross Settlement) system. RTGS is a payment system that provides the platform for central bank reserves in sterlings, or the electronic counterpart to banknotes, as the risk-free means of final payment settlements. On an average day, RTGS settles around £500bn between banks or almost a third of the UK’s annual GDP.
This system is integral to the economic stability and future of Great Britain, and the bank has been seeking counsel on future revisions throughout 2016. Speaking with the two dozen users of its RTGS system, they would like to see revisions that which would make growing the network to include smaller clients easier. Other benefits include increased security and compatibility with other financial systems, which are also switching over the distributed ledger systems.
“The new RTGS service must be capable of interfacing with a range of new technologies being used in the private sector, including distributed ledgers, if [and] when they achieve critical mass,” the Bank of England says regarding Blockchain technology.
While potentially adding Blockchain technology capability to RTGS looks to be a reason for these systematic revisions, distributed ledgers are not expected to become the core of the system, as it is with Bitcoin, for example.
“The resilience characteristics of the distributed ledger, in particular, are potentially highly attractive from a financial stability perspective. It is however unlikely that this technology will prove sufficiently mature to form the core of the next generation of RTGS, itself.”
There has also been talk of the Bank of England offering its own digital currency, with reports of an RSCoin earlier this year. In their full 58-page consultation paper on the subject of this operational reorganization, they address the potential of a new digital currency. Their statement makes it clear that this is on the table, so to speak, but more research on the idea needs to be done.
“The Bank has a research agenda on digital currencies established for the coming years. The research will analyze the economic and financial stability impact of a potential central bank digital currency, including how it could interact with monetary, financial stability and fiscal policy. The research agenda also includes how a central bank digital currency could be technically implemented.”
Next year, they expect to create an official timetable for the future changes.