Last week the Bank of England announced that it was working on a ‘Proof of Concept’ (POC) using blockchain to validate if real-time gross settlement (RTGS) service would benefit from using the technology.
Real-time gross settlement systems (RTGS) is a funds transfer systems where the transfer of money or securities takes place from one bank to another on a "real time" and on a "gross" basis. This means that the transactions are settled instantaneously when processed on a one-to-one basis.
The Bank reports,“Although the Bank has concluded that Distributed Ledger Technology (DLT) is not yet sufficiently mature to provide the core for the next generation of RTGS, it places a high priority on ensuring that the new service is capable of interfacing with DLT as and when it is developed in the wider sterling markets.”
The bank has released its ‘Proof of Concept’ (POC) brief and according to reports is testing the technology with Baton Systems, Clearmatics Technologies Ltd, R3, and Token.
The purpose of the POC is to allow the bank an opportunity to understand how the technology works, and the advancing of distributed ledger technology (DLT) development for existing business functions, and how the bank may benefit from deploying the tech in real-time, real world scenario. The bank however believes that the issue with the system is the scalability, which is one of the top trade-offs as the institution considers its move towards DLT system.
Elsewhere, the European Central Bank (ECB) and the Bank of Japan (BoJ) have released a study of how Blockchain can help transform securities settlement.