The upcoming payment service of the Bank of England is designed to support a possible central bank digital currency (CBDC).
New System Will Be Compatible with Digital Pound
It is stated that the redesigned real-time gross payment service (RTGS), which is the payment network used by the UK financial institutions, is compatible with CBDCs. The new payment system is designed to provide an opportunity for digital currency transactions if the bank decides to support a CBDC. In addition to the digital pound for other future payment systems, other future assets are also considered for the modules.
RTGS is an important component of the UK's financial infrastructure - where institutions keep sterling accounts and act as the main channel for BoE to inject liquidity into the economy. On average, RTGS processes £ 685 billion ($ 900 billion) of transactions each working day.
BoE announced on Thursday that it has chosen the Irish technical consultancy company Accenture by signing a £ 150 million ($ 195 million) contract to redesign the network of payments. Accenture said that the new RTGS system will adapt to the changing financial system, providing access to more companies, greater interoperability and functionality.
The new RTGS system is expected to be implemented in 2022. Earlier this month, BoE chief Andrew Bailey said the 400-year-old central bank is seriously considering launching a CBDC. Authorities previously said that BoE is open to the idea of private companies that play a larger role in digital pound issuance, provided they adhere to the bank's design and policy principles.