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The Bank of England has set 2020 as the date to replace its Real Time Gross Settlement (RTGS) service to ensure it can cope with the changing payments ecosystem.
The announcement follows a consultation that was announced in January.
The 20-year-old RTGS service settles payments between banks, which is essential to keep money flowing in the economy. On an average day, about £500bn is settled by RTGS.
The Bank of England’s consultation has included potential future users of the service, authorities, payment system operators, experts and broader public interest groups.
This consultation identified five requirements for the next generation of RTGS.
It said the system must be capable of responding to the financial system’s changing structure and recognise that payments system users wanted simpler and more resilient pathways for their payments.
The RTGS must also be capable of interfacing with a range of new technologies, including distributed ledgers, and must have the capacity to support the future evolution of regulatory and monetary policy tools, the Bank said.
“Compared to the RTGS of today, the Bank’s proposals are intended to provide broader access, higher resilience, greater interoperability and a wider range of user functionality,” it said.
Read more about Bank of England IT
The Bank of England has chosen Deloitte to launch an investigation into a systems outage that forced the temporary suspension of the Clearing House Automated Payments System (CHAPS).
Fault affects the Bank of England’s Real Time Gross Settlement (RTGS) system and prevented payments.
Andrew Hauser, executive director for banking, payments and financial resilience at the Bank of England, said: “The world of payments is changing rapidly, and central banks need to keep pace if we are to deliver our mission of monetary and financial stability effectively in the years to come, while also enabling innovation and competition where we can.
“Taken together with prospective reforms to retail payments under way in the industry, [the proposed changes] are designed to keep the UK payments infrastructure at the leading edge globally while underscoring our commitment to maintaining stability and confidence.”