The Bank of England (BoE) is looking to explore the demand for introducing synchronised settlement to the renewed Real-Time Gross Settlement (RTGS) service.

It has issued a call for interest from FinTech firms to help investigate the potential and understand the design implications for organisations which would interface with the system.

At the heart of synchronisation is the concept of ‘atomic settlement’, which means that the transfer of two assets is linked to ensure that the transfer of one asset occurs if, and only if, the transfer of the other asset also occurs.

The BoE believes that for certain transaction types, this functionality could reduce cost and risk, improve efficiency, and support innovative new methods of settlement.

The RTGS service lies at the heart of delivering monetary and financial stability. It is used to provide safe final settlement in central bank money for over £600 billion of transactions a day — from salaries to company invoices, pensions to investment flows.

In March, the BoE started a proof of concept project to understand how RTGS could be capable of interacting with distributed ledger technology (DLT). It concluded that although DLT is not yet sufficiently mature to provide the core for the next generation of RTGS, it places a high priority on ensuring that the new service is capable of interfacing with DLT as and when it is developed in the wider sterling markets.

Then in June, a six-week consultation was launched on the adoption of a common global ‘language’ or messaging standard, known as ISO 20022, for payments in the UK. The change is being enabled by the planned delivery of two major UK payment infrastructures, a renewed RTGS for CHAPS payments and the New Payments Architecture for Bacs and Faster Payments.

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