The Bank of England (BoE) will rebuild its Real Time Gross Settlement (RTGS) system using distributed ledger technology to work with private payment systems.
The RTGS is the “backbone of every payment in the UK,” Mark Carney, governor of the BoE, said in a speech, and the new system will provide a platform for private innovation and make it easier to “plug in and pay”.
He continued: “Our new, hard infrastructure will be future-proofed to your imaginations, opening up a range of potential innovations in wholesale markets, and corporate banking and retail services.”
Lower cross-border payment costs will also be addressed by the re-configured RTGS, and the BoE will collaborate with the Bank of Canada, the Monetary Authority of Singapore and other private-sector firms to improve in this area.
“The potential returns are large,” Carney added. “At present, cross-border payments can cost ten times more than domestic ones. We estimate that in the UK alone there is scope to realise annual savings of over £600 million.
“Most fundamentaly, the more seamless are global and domestic payments, the more UK households and businesses will benefit from the new global economy.”