Bank of England is building up a reputation in the world of the blockchain. To improve their payment system, the institution is planning to upgrade their technology by 2020. Distributed ledgers will play an integral part in this new system, which will be used to move over US$600bn on a daily basis. Making legacy systems play together with blockchains is not an easy task, though.
A Bank of England spokesperson recently told Reuters how the new Real-Time Gross Settlement system would need to be capable of interfacing with new technologies. This will include direct communication with distributed ledgers, assuming that technology will ever achieve critical mass. According to some people, that is only a matter of time, though.
It has to be said, Bank of England is one of the financial institutions most actively exploring blockchain technology as of late.Distributed ledgers provide a more efficient way for the private sector to deliver payments and settle securities. It would also make sense to apply this same technology to the core of the payments system used by the bank.
At the same time, the Bank of England is still exploring the opportunity for issuing their own digital currency. Albeit these plans may appear to be put on ice, for now, research and development are still taking place behind the scenes. Whether or not a national digital currency is a good idea, remains to be seen.
While the Bank of England is actively trying to provide blockchain compatibility for all of its internal systems, there are still some doubts about the benefits of the blockchain. The maturing process of distributed ledgers is still in the very early stages, and a lot of work has yet to be done.
Future-proofing the legacy system for blockchain technology is a positive sign. In a way, the Bank of England is validating the potential of this technology in the banking ecosystem. But at the same time, the amount of work left to be done should; not be underestimated by any means. The future looks bright for blockchain, but we are not there yet.
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