Bank of England Announces Blockchain Proof-of-Concepts for International Payments

The central bank of the United Kingdom, the Bank of England, has today published details of blockchain proofs-of-concept, developed in conjunction with blockchain startup Ripple.

The Bank of England, which has oversight for monetary policy and banking in the U.K., unveiled details of its test projects with Ripple, including an application developed on the Interledger protocol that would support cross-border, cross-blockchain transactions.

The trial was based around exchanging two distinct currencies across two real-time gross settlement systems, designed to reflect international payments across two distinct settlement platforms.

According to a statement from the bank, the trial is designed to allow them to further explore the liquidity environment surrounding these types of transactions.

"Cross-border payments when applied to wholesale markets present different challenges than when compared with retail and corporate transactions, which the Ripple product is designed to handle. The availability of liquidity is one such challenge, and the PoC allowed the Bank and Ripple to begin exploring these questions."

The Bank of England has been particularly bullish on blockchain development, and in particular on its potential implications for the wider financial system.

Last year, the bank established a fintech accelerator, designed to foster the growth and development of startups exploring these technologies, in addition to working on several of its own projects.

While there has been no official confirmation that the bank will embrace blockchain technology in any of its own systems so far, it is thought to be developing new systems that will be compatible with blockchain transactions, for more straightforward integration in the years to come.

Meanwhile, development partner Ripple has been at the forefront of developing blockchain technologies. The company, responsible for its own cryptocurrency XRP, works with banks to develop financial systems that make the most of distributed ledger technology.

The announcement from the Bank of England comes at a time of increasing activity in this area among central banks, with central banks in Sweden, Singapore, South Korea, Japan and elsewhere making similar advances in developing blockchain-based solutions for the wider financial sector.