The Bank of England is working on a proof of concept to enable privacy amongst participants in a distributed ledger technology (DLT) based system.
At a meeting for FinTech contacts of the BoE’s Agency for the South East and East Anglia at the offices of Mills & Reeve, Cambridge, Andrew Hauser, Executive Director for Banking, Payments and Financial Resilience, spoke on the work of the bank’s FinTech Accelerator (the Accelerator) since its launch in June 2016.
Elaborating on three DLT PoCs, Hauser said that the first was undertaken with PwC. It proved that while it was possible to build a multi-node scalable DLT environment enabling the transfer of ownership of a fictitious asset, the technology was not ready to form the core of live central bank infrastructure such as the Bank’s RTGS service.
The second PoC explored the potential to use Ripple’s DLT system to link two simulated but otherwise standard RTGS systems, built in the cloud, to enable cross-border payments to settle in central bank money simultaneously. This PoC helped in identifying some of the operational and technical challenges of such synchronisation.
“Our work on DLT has helped us start to think through how the financial networks of the future may be able to operate in safer and more efficient ways...” Hauser said.
Further revealing the details of the most recent DLT PoC, Hauser said that it will be done with Chain. It is designed to examine a key tradeoff in DLT design.
“The PoC will examine the extent to which DLT based systems can be configured to enable privacy amongst participants, whilst keeping data on a shared ledger: one of the holy grails of DLT design,” he said.
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