Bank of England Recognises Need for Blockchain-based Cross-border Payments

Bank of England Recognises Need for Blockchain-based Cross-border Payments

On Thursday, Mark Carney, the Governor of the Bank England (BoE), in a speech entitled “New Economy, New Finance, New Bank”, recognised that the Bank of England’s “…infrastructure must be overhauled now that the economy is on the cusp of the fourth industrial revolution…”

Because “The economy is reorganising into a series of distributed peer-to-peer connections across powerful networks,” Mr Carney announced the BoE will rebuild their Real Time Gross Settlement (RTGS) system so that it can interface with private business and platforms using blockchain technology.

Platform 3 Way Improvement

Expanding upon his statement, Mr Carney explained that there were 3 ways in which the new RTGS platform would make it simpler “…for people to plug in and pay, even across borders.”

  • The new generation of non-bank payment service providers (PSPs), including those using distributed ledger, will have direct access to RTGS and no longer will access to central bank money be the exclusive preserve of banks.
  • A lowering of costs in cross-border payments by connecting with foreign entities. The BoE is now collaborating with the Bank of Canada, the Monetary Authority of Singapore and several private-sector firms to improve inter-bank cross-border payments, including initiatives based on distributed ledger.
  • The new RTGS will capture more data on every payment made. While the Bank is currently consulting on how to do this, they publicly believe it should improve access to the domestic and global financial system, support greater choice and competition for corporate end-users.

The news comes just 3 months after Mr Carney, a previously avid critic of decentralised cryptocurrencies such as Bitcoin, admitted he was keen to combine “…distributed ledger technology with the trust inherent in fiat currencies…”

While the RTGS revamp is a clear sign of how seriously the Bank is taking this fourth industrial revolution, it remains to be seen if Mr Carney and his counterparts will be successful in maintaining overall confidence in a debt-ridden fiat system.