The central bank of the UK is making improvements to the RTGS payment and settlement system in order to make sure it can support the operation of a potential state cryptocurrency that may appear in the future.
The Bank of England wants a version of the Real-Time Gross Settlement System (RTGS) – the payment system being in operation in UK`s financial institutions – to be a complete match with the potentially issued government cryptocurrency.
The new settlement system is being created in a way that allows the Central Bank to use the mechanism to run transactions with digital currencies. There are modules for further capabilities, including the so-called digital pound, that is also being explored as potential components of the developed settlement system.
RTGS is a vital component in the UK financial infrastructure. By this system, institutions support their accounts in pounds sterling and act as the main bridgehead through which the Bank of England can inject liquidity into the economy. Statistically, RTGS trades asset volumes of over £685bn every single day.
On July 30, the Bank of England released a statement informing that it had made a £150m deal with Irish consulting firm Accenture to bring up to date its payments network. By the words of Accenture, the newly developed RTGS network is being adapted to the everchanging financial system, allowing more businesses access to it, and with improved interoperability and functionality.
As for starting operations, the new system is expected to be launched by 2022. Earlier in July, Bank of England Governor Andrew Baily stated that the regulator is now exploring the pros and cons of issuing a cryptocurrency by the British government. Furthermore, the Central Bank highlighted that the design principles of the potential cryptocurrency are more important than the underlying technology, and that now existent or yet non-existent private cryptocurrencies may be a useful tool in the future.
