Although financial banking institutions have criticized cryptocurrencies for long, they have always supported the underpinning blockchain technology that facilitates users with instant global payments at low cost.
On Tuesday, Bank of England announced that it is undertaking a proof-of-concept (PoC) in order to understand how the Distributed Ledger Technology (DLT) can interact with bank’s existing Real Time Gross Settlement (RTGS) system.
As the name suggests RTGS systems make real-time transaction settlements as soon as the payments are processed on a one-to-one basis and without linking it with any other transaction. RTGS is usually operated by the country’s central banks and used for high-value transactions that require instant clearing.
In its latest statement, the Bank of England said: “Although the Bank has concluded that DistributedLedger Technology (DLT) is not yet sufficientlymature to provide the core for the next generation ofRTGS, it places a high priority on ensuring thatthe new service is capable of interfacing with DLT as and when it is developed in the wider sterlingmarkets.”
The Project participants which include the payments technology providers Baton Systems and Token, R3 and Clearmatics Technologies will be testing and examining whether the new “innovative settlement systems” based on DLT will be able to interact with the renew RTGS systems. The aim is also to create a functionally expanding service using the DLT.
Bank of England said that it hopes that the firm’s involvement will “give broader insight into the range of functionality the Bank might need to offer to support this sector.”