New payments system will be blockchain-friendly: Bank of England

On Monday, Bank of England (BoE) updated its payments system to make it compatible with blockchain-based financial technology forms.

According to a report in Coindesk, the BoE had earlier presented a 'proof of concept' and asked several firms including technology providers Baton Systems and Token, R3 and Clearmatics, for feedback for the same. They were told to examine if the “renewed” cloud-based RTGS service would potentially interact with systems based on distribution ledger technology (DLT) and how its functionality can be expanded.

On Monday, BoE explained, "All participants confirmed that the functionality offered by the renewed RTGS service would enable their systems to connect and to achieve a settlement in central bank money. A number of recommendations were received to ensure optimal access to central bank money." One of the recommendations received was to explore the probable utility of “cryptographic proofs” to protect the data from being altered or stolen.

BoE has been making efforts to modernize its Real-Time Gross Settlement system (RTGS). This announcement is speculated to be a part of the ongoing to efforts which is necessary for banking and trading in Britain. RTGS handles transactions around £500 billion annually or almost one third of the country’s economic output.

In the year 2020, this upgraded system is expected to be launched and it will be designed to be cyber-attack resistant while being available to most of the smaller businesses. This would thus enable the businesses to use the system directly instead of using them through a proxy of a large bank.