Global: Bank of England Seeks Private Sector Input on Payments Innovation Roadmap

The Bank of England is reaching out to the private sector for feedback on its strategic roadmap for innovation in money and payments.

The central bank has released a Discussion Paper detailing its approach to addressing the rapid evolution of payment systems and its implications for monetary and financial stability. The paper outlines ongoing initiatives, including the renewal of the nation’s Real-Time Gross Settlement (RTGS) system, which features a new core ledger and enhanced capabilities. This includes the introduction of a synchronized settlement interface to RTGS, designed to facilitate interoperability with other ledgers and Distributed Ledger Technology (DLT) platforms.

Additionally, the Bank is planning a series of experiments involving a wholesale Central Bank Digital Currency (CBDC). These experiments will focus on Delivery versus Payment (DvP) securities transactions, Payment versus Payment (PvP) foreign exchange transactions, and the interoperability of the CBDC with other global ledger initiatives.

The discussion also covers the potential impact of tokenized money and programmable payments. The Bank acknowledges that the effect of programmable platforms on monetary and financial stability depends on their adoption by financial markets at scale. While the current likelihood of widespread adoption remains uncertain, the Bank emphasizes the importance of preparing for potential future developments to meet its stability objectives.

Andrew Bailey, Governor of the Bank of England, underscores the importance of confidence in money and payments to the Bank’s role in ensuring monetary and financial stability. “As innovation in this space progresses, our role must adapt to support a robust and dynamic UK economy,” Bailey states. “Building on our recent efforts with digital money and the renewal of our RTGS infrastructure, we are now positioned to explore new technologies in wholesale payments and foster greater innovation in interbank retail payments. This will require close collaboration with the private sector and other authorities, which is why we are seeking input through this Discussion Paper.”

The Bank invites comments on the Discussion Paper by October 31, 2024.