Canada, UK and Singapore prep for blockchain-powered payments
The trio has today (15 November) published a report which assesses alternative models that could enhance cross-border payments and settlements. The report examines existing challenges and considers alternative models.
The 68-page report, “Cross-border interbank payments and settlements: Emerging opportunities for digital transformation”, provides an initial framework to assess matters.
Victoria Cleland, Bank of England executive director for banking, payments and financial resilience, says: “It is important that cross-border payments, which totalled 1.8 times global GDP in 2016, are enhanced too. They are at the centre of the international financial system; enabling trade, investment and money transfers.”
She reckons the report “provides a foundation that will enable further exploration of how innovation could improve this crucial aspect of finance”.
The report examines three models. The first two are built on existing domestic interbank payment systems using traditional technology.
The third model focuses on the use of “Wholesale Central Bank Digital Currency” and its various applications through distributed ledger technology (DLT). The models could be used to improve “access, speed and transparency of cross-border payments”. BoE had talked about a “Central Bank Digital Currency” back in May.
However, the report finds that further work would be required, by both industry and regulators, if the models were to be developed further.
The project involved collaboration among the three central banks, who were supported by a group of financial institutions led by HSBC. Contributors included OCBC Bank, the Toronto-Dominion Bank (TD), United Overseas Bank (UOB) and Payments Canada.
Back in June, BoE and other participants in a real-time gross settlement (RTGS) proof of concept confirmed that blockchain can connect to their systems to achieve settlement.
The full 68-page report is here.