Bank of England wants blockchain and settlement services to be compatible

Rage Comment : The Bank of England has invested a lot of manpower and funds in the settlement system, but due to the fact that the development of blockchain technology has just started, it is unable to truly realize a specific application. Moreover, the current industry and technological status and trends also require that any new system must be able to achieve a high degree of compatibility. Therefore, although the vision is beautiful, it is currently impossible to realize an actual settlement system with blockchain technology as the core element.

Translation: Annie_Xu

Last week the Bank of England announced that it wants its next-generation settlement system to be compatible with blockchain technology.

Last week's consultation paper set out the main features of the central bank's planned real-time settlement system, called Real-Time Gross Settlement (RTGS).

The central bank noted that the RTGS system will become the basis of the central bank's functions. Earlier this year, the central bank began exploring how to improve, upgrade or even directly replace the existing settlement system. One of the considerations is how to be compatible with the private sector blockchain research and application after it reaches a critical mass. The author of the relevant document said that the application of new financial technologies means that any real-time settlement system of the central bank must be able to achieve a certain degree of compatibility.

The Bank of England has been exploring the application of Internet finance and has also set up a project accelerator, part of which focuses on the possibility of the central bank issuing digital currency.

The central bank pointed out that the real-time settlement system can provide a reliable and rapid source of information for these Internet financial applications.

“To operate most efficiently, these technologies need to integrate rich data inputs, seamless communications, and high availability. Although the concept of distributed ledger technology is still in its infancy, it has great potential to innovate and open up new ways for enterprises to exchange value without relying on centralized infrastructure.”

Without over-exaggerating the blockchain vision, the author goes on to note that blockchain technology is unlikely to form the core of any BoE payment system.

“From a financial stability perspective, the flexibility of distributed ledgers is particularly attractive. However, blockchain technology is not yet mature enough to become a core element of the next generation of RTGS systems.”