The Bank of England is seeking input from the private sector regarding its roadmap for innovation in money and payments.
The central bank has released a Discussion Paper outlining its response to the rapid advancements in payments and their implications for monetary and financial stability.
A key initiative is the ongoing renewal program for the nation’s Real Time Gross Settlement (RTGS) system, which will feature a new core ledger and various enhancements. Additionally, the Bank is working on a synchronised settlement interface for RTGS that will enable interoperability with other ledgers and DLT-based platforms.
Moreover, the Bank plans to conduct a series of experiments for a wholesale Central Bank Digital Currency (CBDC). These experiments will explore delivery versus payment (DvP) securities transactions, payment versus payment (PvP) foreign exchange transactions, and compatibility with other global ledger initiatives.
The discussion also encompasses the use of tokenised money and programmable payments. The Bank notes that the potential impact of programmable platforms on monetary and financial stability will depend on the extent to which financial markets adopt these technologies on a large scale. Currently, the likelihood of widespread adoption remains uncertain, but the Bank recognizes the importance of preparing for this possibility to achieve its objectives.
Andrew Bailey, Governor of the Bank of England, emphasizes that confidence in money and payments is crucial to the bank’s role in maintaining monetary and financial stability. He states, "As innovation in this space continues, our role must also evolve to support a robust and dynamic UK economy. By building on our work in recent years regarding new forms of digital money and renewing our RTGS infrastructure, we can now further explore new technologies in wholesale payments and encourage greater innovation in interbank retail payments. Achieving this will require input and close collaboration with the private sector and other authorities, and this Discussion Paper outlines our thoughts in these areas."
The Bank invites feedback on the Discussion Paper by October 31, 2024.