The Bank is looking to work with a range of organisations, including fintech firms, to explore the demand for introducing synchronised settlement to the renewed RTGS service.
RTGS is used to provide safe final settlement in central bank money for over £600 billion of transactions a day, spanning the vast majority of payments in the UK economy — from salaries to company invoices, from car purchases to coffee sales, from pensions to investment flows.
At the heart of synchronisation is the concept of ‘atomic settlement’.
This means that the transfer of two assets is linked in such a way as to ensure that the transfer of one asset occurs if and only if the transfer of the other asset also occurs. The Bank believes that for certain transaction types, this functionality could reduce cost and risk, improve efficiency, and support innovative new methods of settlement.
The paper can be read here.
Source: Bank of England