The Bank of England turns to the private sector for input on payments innovation

The Bank of England has developed a roadmap meant to bring innovation to matters involving money and payments. However, it now asks for the private sector to share its thoughts and provide input.

Innovations in the payments sector

The bank recently published a Discussion Paper, which provided its response to a wave of rapid innovations in the payments sector. The innovations are expected to have a considerable impact on monetary and financial stability, which is why the bank felt obligated to address it.

Especially since the ongoing renewal program for the country’s Real Time Gross Settlement (RTGS) system is already in the pipeline. The system includes a new core ledger, but also an entire range of new capabilities and features.

One of the goals was to enhance resilience, but apart from that, the bank is also working on additional features, including a synchronized settlement interface to RTGS. With it, the system will be able to communicate with other DLT-based platforms and ledges, expanding its reach.

Next, the Bank of England is also planning to launch a series of experiments for a wholesale Central Bank Digital Currency (CBDC). The program would cover PPvP foreign exchange transactions, DvP securities transactions, as well as interoperability with other global ledger initiatives. In addition, the use of tokenized money and programmable payments is also on the table as a matter of discussion.

The bank is preparing for the widespread adoption of new technologies

Commenting on the program, the bank said that the extent to which programmable platforms could impact the monetary and financial stability objectives of the country will depend on the likelihood that financial markets take up the new technologies at scale. It also added that it is uncertain how likely it is that these technologies will actually be adopted.

Despite this, it believes that it is important to prepare for the potential widespread adoption, in order to ensure that the objectives would be met.

The BoE’s Governor, Andrew Bailey, stated that confidence in money and payments remains fundamental for the bank’s responsibility to maintain financial and monetary stability.

“As innovation in this space continues, our role must also evolve, to support a robust and dynamic UK economy,” he said. Bailey also added that building on the bank’s network over the past several years and accounting for several new forms of digital money, as well as renewing the Bank’s RTGS infrastructure, now allows it to do more in terms of exploring new technologies in wholesale payments.

On top of that, it encourages greater innovation in interbank retail payments. But, in order to do it, it requires input and collaboration from the private sector, as well as other authorities. The Discussion Paper is now available to the public, and the bank will be collecting responses and input from the public until October 31 of this year.