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Bank of England Building Payments Network to Support a Potential Digital Pound
CoinDesk has learned the Bank of England's new settlement system is being built so it can be forwards compatible with a digital currency.
By Paddy Baker
Updated Sep 14, 2021, 9:38 a.m. Published Jul 30, 2020, 2:13 p.m.
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The Bank of England's upcoming settlement service is being designed to support a possible central bank digital currency (CBDC).
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- CoinDesk has learned the BoE will ensure its redesigned real-time gross settlement service (RTGS), the payments network used by U.K. financial institutions, can be forwards compatible with CBDCs, such as a digital pound.
- The new settlements system is being designed that the bank could "bolt on" a facility for digital currency transactions, should it decide to support a CBDC.
- Modules for other future capabilities, as well as the digital pound, are also being considered for the upcoming settlement system.
- RTGS is a key component in the U.K.'s financial infrastructure – it's where institutions hold their sterling accounts and acts as the main channel for the BoE to inject liquidity into the economy.
- On average, RTGS settles more than £685 billion ($900 billion) worth of transactions each working day.
- The BoE announced Thursday it had chosen Irish tech consultancy firm Accenture for a £150 million ($195 million) contract to redesign the payments network.
- In a statement, Accenture said the new RTGS system would adapt to the changing financial system by providing access to more firms, as well as greater interoperability and functionality.
- The new RTGS system is expected to go live in 2022.
- Earlier this month, BoE Governor Andrew Bailey said the 400-year-old central bank was seriously considering whether to launch a CBDC.
- Officials have previously said the BoE was open to the idea of private companies having a greater role in the issuance of a digital pound, insofar that they stick to the bank's design and policy principles.
See also: Canada’s Central Bank Is Serious About Designing a CBDC, Job Posting Reveals
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