Bank of England’s New payments system will be blockchain-friendly
The Bank of England is executing an updated payments system for the interbank payment system that is compatible with blockchain-based financial transactions.
According to the reports the Central bank published a report evaluating its recent Proof-of-Concept (PoC) with numerous firms functioning in the distributed ledger technology (DLT) space. The test was intended to check the practicability to link blockchain firms to a new version of Real Time Gross Settlement of the bank.
The Bank of England is constantly trying to modernize the Real-Time Gross Settlement system (RTGS). This is very crucial for the transaction and trading in Britain. Also, it can manage transactions worth around £500 billion each year, or nearly one-third of the country’s economic output.
The announcement marks as the latest in the Bank of England’s efforts. Authorities believe that the advanced system will be launched in 2020. The advanced version will be tamper proof from hacking, crypto hijacking and will be made available to wider users. This would ultimately decrease the dependency the small businesses have on large banks by using the system directly.
In March, “proof of concept” was presented by the BoE asking several firms, including payments technology providers Baton Systems and Token, R3 and Clearmatics, for feedback. Sources suggest that the newly-published report on the trial, all participants confirmed that its functionality could be expanded through the use of RTGS and achieve the settlement in central bank money.
“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.”
To protect and safeguard data from being stolen and tampered, the recommendations was to explore the possible use of “cryptographic proofs.”
Bank of England has released a Staff Working Paper (Central bank digital currencies — design principles and balance sheet implications) in May that states about the models of Central Bank Digital Currencies. There are three models of CBDC which are dependent upon the areas for access.
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