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A trade group says blockchain technology could help the UK’s $14.5 trillion payments sector
The UK’s financial trade body UK Finance has said blockchain-based payment and settlement systems could help the country’s financial sector, which processes $14.5 trillion in payments annually. The announcements on September 17 came after a successful trial phase of a blockchain-based ledger for central bank digital currencies (CBDCs) and tokenized assets called the Regulated Liability Network (RLN).
UK Finance said the RLN could support innovation and enable new financial functions such as programmable payments. The trade group outlined the findings of the network’s trial phase, which involved 11 banks, and called for greater collaboration with regulators and other public bodies. It said the RLN could reduce fraud and lower the cost of failed payments.
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While the UK’s legal and regulatory framework is sufficiently suitable to provide a flexible platform for innovation, UK Finance has highlighted that this framework requires “greater implementation and regulatory engagement”. Jana Mackintosh, UK Finance’s managing director of payments, said the private sector wants to invest in the future of commercial bank money and that partnering with regulators is the best way to achieve this goal successfully.
RLN uses distributed ledger technology (DLT) and aims to help commercial banks manage $14.52 trillion (£11 trillion) in payments transactions annually. The ledger can house central bank digital currencies (CBDCs), commercial bank money and electronic currencies. Any entity with access to the system can record, transfer and settle funds, schedule payments and lock and unlock funds.
One of the findings from the experiments was that RLN could provide a common access point for new firms, allowing them to interact with established institutions and advanced payment and settlement systems. UK Finance also claimed the platform could help achieve the Bank of England’s goals of “maintaining monetary unity and encouraging continued innovation”, as outlined in a discussion paper published in July.
These experiments were launched in April with banks including Barclays, Citi, HSBC, Lloyds, Mastercard, NatWest, Nationwide, Santander, Standard Chartered, Virgin Money and Visa.
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