Speaking at Mansion House in London last week, Governor Mark Carney said the central bank is in the midst of an ambitious rebuild of the RTGS system, which he claimed forms the backbone of every payment in the UK.
New private payment systems, including those using distributed ledger, will be able to “plug in” to the system. “Our new, hard infrastructure will be future-proofed to your imaginations, opening up a range of potential innovations in wholesale markets, and corporate banking and retail services,” Carney said.
The Bank of England recently opened up direct access to RTGS to a new generation of non-bank payment service providers (PSPs), meaning access to central bank money will no longer be the exclusive preserve of banks. Several non-bank PSPs, focused on retail and corporate services, are currently applying.
“The electronic money flowing through their systems will become more like its physical relative,” Carney stated. “Electronic payments are becoming instantaneous by using QR codes or mobile phone numbers. Checkout can be eliminated. The customer, not cash, will reign supreme.”
The Governor also claimed the re-configuration of the system will lower the costs of cross-border payments, resulting in annual savings of over £600 million in the UK alone. The Bank of England recently began collaborating with the Bank of Canada, the Monetary Authority of Singapore and several private sector firms to improve inter-bank cross-border payments, including initiatives based on distributed ledger.