Bank of England aims to revamp interbank payment system by 2020

September 16, 2016 09:49 AM

The Bank of England said today it aimed to revamp the system that underpins British banking and trading in the City of London by 2020 to boost its defenses against cyber-attacks and widen the number of businesses that can use it.

The BoE's Real-Time Gross Settlement (RTGS) handles transactions worth around 500 billion pounds ($659 billion) a day - equivalent to almost a third of Britain's annual economic output.

It suffered a major outage in October 2014, and in June BoE Governor Mark Carney said he wanted to make it easier for smaller firms to use the system directly rather than via large incumbent banks.

Today the BoE set out more detailed proposals and said it planned to fund the changes by temporarily increasing the charges banks pay to use the system.

"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 ... whilst also enabling innovation and competition where we can," BoE executive director Andrew Hauser said.

Proposed enhancements include running the system continuously, rather than just during normal working hours, and making it easier for smaller banks, brokers and payment processing firms to access the system directly.

"A key enabler for delivering these changes will be a comprehensive rebuild of the RTGS technology platform. The Bank will make decisions on its resilience, including in particular its cyber defenses, in consultation with intelligence partners," the BoE said.

Other goals included allowing forward-dated payments and creating an interface with the 'distributed-ledger' technology that underpins digital currencies such as bitcoin "if/when they achieve critical mass", it said.

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