Banking

Bank of England : DLT not sufficiently mature

bank of england

The Bank of England has announced its plan for a Proof of Concept using Distributed Ledger Technologies DLT. The Bank is planning a modernization of the Real-Time Gross Settlement (RTGS). RTGS is an accounting system that allows eligible institutions to hold reserve balances at the Bank and settle obligations to each other.

Despite launching the PoC, the bank stated that “DLT is not yet sufficiently
mature to provide the core for the next generation of RTGS”. But it wants to be capable of interfacing with DLT platforms when they go live in the future.

When the bank launched its roadmap for reforming the RTGS one of the objectives was to support innovative payment technologies, of which DLT is one. The PoC is not going to focus on a single platform but instead partner with several firms, which are not all DLT related companies: Baton Systems, Clearmatics Technologies Ltd, R3, and Token.

The PoC participants have access to a cloud-based sandbox system running the latest version of the “renewed” RTGS service.

The surprise is the absence of Ripple and Stellar. Most of the selected companies are UK based or have a physical UK presence, but not Baton Systems. The company selection is useful as it’s an indication of which technologies the bank thinks it may need to integrate with in the future. The other perspective is that Ripple and Stellar sidetrack conventional banking systems whereas the four selected integrate with them.

Baton Systems

The startup offers a clearing and settlement system. This one is the odd one out because it doesn’t appear to have a UK presence.

Clearmatics

The company is the technology partner behind the Utility Settlement Coin Project. Coin here does not mean ICO. The UBS initiated project is similar to RTGS where eleven major banks use collateralized tokens for settlement. Each token represents actual fiat currency. The tokens are used in place of cash.

R3

Creators of the R3 Corda platform owned by 70 of the world’s largest financial institutions.

Token

The business with offices in the US and UK has created an ‘open banking platform’. They are not a blockchain company, despite their name. Their systems allow a global ecosystem of banks, bank customers, and developers to move money and information securely, without friction and instantly worldwide.

Image Copyright: Michal Bednarek / 123RF