Bank Of England – Billionaire365

Bank of England (BoE) To Use Blockchain Technology To Optimize Payments Systems

The Bank of England (BoE), the highest monetary authority in the UK, said its payment system could use distributed ledger technology (DLT), better known as blockchain technology, to interconnect with FinTech companies and protect itself from cyber attacks.

In a statement released recently, the BoE said a revamped Real Time Gross Settlement System (RTGS) should be able to link to Financial Technology (FinTech) firms using distributed ledger technology (DLT), also known as blockchain technology.

At the end of March this year, the British Central Bank announced the launch of a Proof of Concept (PoC), supported by Baton Systems, Clearmatics Technologies Ltd, R3, and Token. The purpose of the test was to discover ways in which the use of blockchain or DLT technology could facilitate a renewal of the RTGS system so that a diverse and flexible range of settlement models could be offered.

According to the document summarising the objectives and results of the PoC, “all participants confirmed that the functionality offered by the enhanced RTGS service would allow their systems to connect and achieve settlement of central bank money.”

Once the objectives of the PoC have been met, the Bank of England intends to investigate whether the RTGS service could acceptably record crypto evidence.

The Bank of England (BoE) to employ blockchain technology (distributed ledger technology) for payments

The crypto tests mentioned above, as explained in the BoE publication, are about functions that allow authentication of a user’s identity and protection of valuable information located on the network.

According to Reuter, the RTGS underpins British banking and commerce in the City of London. Through this system, there is a money supply of around 500 billion GBP, equivalent to almost a third of Britain’s economic output. The news agency said the system is expected to be ready for renewal in 2020, “to strengthen defenses against cyber-attacks and expand the number of companies that can use it.”

On the other hand, the BoE has carried out other concept tests related to blockchain technology, which it has been researching since 2016. In April of this year, the results of a study conducted by this financial institution were released, which verified the feasibility of a decentralized distributed ledger technology (DLT) platform with sufficient privacy for sensitive data.

The integration of traditional payment systems and blockchain technology, which supports cryptocurrencies, is in the interest of the financial sector globally. Recently, Mastercard registered a patent on a system that would allow the banking network of fiat currency payments to be interconnected with cryptocurrencies, through the blockchain technology.

Anna Galvez

After having carried out a Proof of Concept (PoC) with the startup Chain, the Bank of England recently published that it came to the conclusion that a distributed decentralized blockchain technology platform with a degree of privacy for sensitive data seems possible.

According to the official report, the research was conducted with the aim of exploring whether the blockchain technology can maintain the levels of privacy required by the banking system participants, at the same time that the information is distributed among all the participating nodes and that the transactions they can be supervised by the regulatory authorities.

The conclusion they reached responds to a doubt expressed by the bank since they began to investigate the technology in 2016

“It seems theoretically possible to configure a distributed accounting system so that transactions remain private while All the data shared in the network are maintained, and at the same time, a regulatory view of all transactions is maintained,” the bank said.

The testing was carried out with a transfer of ownership of a fictitious asset among several participants, including the central bank and a regulatory body. The activity supported by Chain was carried out for exploration and learning purposes, as published by the bank.

In the test, the issue and withdrawal of assets, as well as the granting of access to the general ledger, was the responsibility of the central authority, while the regulatory authority could have access to supervise all transactions.

Although the answer was “theoretically possible” regarding blockchain technology, security issues still need to be fixed

The report highlights that other aspects of the technology of the distributed ledger still “must be explored further” since the blockchain is not yet competitive to process banking transactions in the speed of processing and the scalability of it. An issue that, for the moment, does not make the adoption of blockchain technology viable as a platform for the processing of all transactions, according to the Bank of England statement.

To understand the importance of this test it is necessary to take into account that the privacy of the data has been one of the main concerns of the banks regarding blockchain. A fact that has led banking corporations to develop private blockchain-based solutions such as the one proposed by the Bank of England.

In addition to this proof of concept based on the use of blockchain technology for the banking sector, last March, the Bank of England announced another proof of concept, this time for the support of its gross settlement system, whose results are expected to be obtained by the end of this 2018.

Anna Galvez