The Bank of England has completed a proof-of-concept with Ripple exploring the synchronised movement of two different currencies in two different simulated real-time gross settlement (RTGS) systems using the Interledger Protocol.
RTGS is a critical piece of national infrastructure and the backbone of UK payments, settling hundreds of billions of pounds each working day.
The BofE has spent several years working on a replacement that would add new functionality to support the ‘synchronisation’ of cash movements made in RTGS with the movement of cash and assets held in other systems.
As part of an effort to analyse the technical options, the central bank's fintech accelerator has been working with Ripple on a PoC focused on a high-value cross border payment scenario in which transactions in two different currencies are executed simultaneously in two different simulated RTGS systems that could represent two different countries.
The Ripple effort is built around the open source Interledger Protocol that enables payments to be made across different ledgers and networks across the world. The solution used Ripple Connect, which acted as the interface that enables an institution’s internal systems to integrate with the firm's network. This means that payment instructions can be sent and received, and the state of payments can be queried.
The partners also used the ILP Validator network which coordinates the settlement of payments between the transacting ledgers, and is the source of truth regarding the success or failure of such payments.
The BofE says it integrated the Ripple solution with two simulated RTGS systems, hosted in the cloud, and demonstrated that it could process a successful cross-border payment across the two simultaneously. This, it says, could help lower settlement risk and improve the speed and efficiency of cross-border payments.
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August 03, 2023 at 06:06AM
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BofE and Ripple explore synchronised settlement of payments using Interledger Protocol - Finextra
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