Bank of England has been interested in looking into the viability of blockchain systems and the benefits of cryptocurrency ever since 2016. However, back then, the bank was aiming at acquiring the RSC and its technology to develop it’s own cryptocurrency. RSC was developed at UCL, as a research project on cryptocurrency. The bank was inclined to become a singular controller for the blockchain of RSC and the encryption key that allows the subtraction or addition of the cryptocurrency from the blockchain system.
Bank of England dropped the idea of issuing it’s own virtual currency or using RSC and even the Britcoin. It has now resorted to Bitcoin after all.
Reuters reported that the Bank of England will be venturing into the cryptocurrency soon. According to the report:
The Bank of England is aiming to revamp the system that underpins British banking and trading in the City of London by 2020 to strengthen defenses against cyber-attacks and widen the number of businesses that can use it.
And yet, last month, the Bank of England issued public statement telling banks to be vary of digital assets and Bitcoins, due to their high volatility and high fraud risks. As the bank attempted to resolve these issues on the back end.
The Bank of England issued a study on RTGS Renewal Proof of Concept, supporting DLT settlement models. An affirmative statement in the study says;
(Blockchian) 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.
Blockchain’s properties to enhance payment systems and to make them fool and tamper proof make it an attractive option for banks and investors. Blockchain is a game changing player in the bank’s ongoing efforts on revolutionizing its service provision and reducing any damages associated with risk.
Its Real-Time Gross Settlement (RTGS) system handles transactions worth around 500 billion pounds – equivalent to almost a third of Britain’s annual economic output. In March this year, The Bank of England announced a “proof of concept” with several firms to see what changes would be needed to the proposed revamp of RTGS to support settlement with firms that use blockchain, the technology used to record transactions in cryptocurrencies like Bitcoin.
Bank of England has made research and awareness provisions to satisfy not only itself, but also its prospect and existing client base on the developments in cryptography. Cryptocurrency can assist the bank in diversifying its risk, adding an extra insulatory layer from economic and political shocks based on the Pound Sterling. To it’s customers, the bank may offer a great deal of safer exchange and transaction options. Incorporating blockchain will lead to dramatic improvements in the Real-Time Gross Settlement System (RTGS.) Performance of the Bank of England as a Central Bank and its role in enabling the economy of the UK, will improve. This up-gradation will allow access to central money to all users as a result.
The bank looked into the market for Bitcoin and studied the performance of the coins closely. The close monitoring is co-related to the pressure and the push that it has felt in the last month to implement the technology affirmatively. Bank of England has repeatedly dwindled to resorting to and away from the Bitcoin.
In March this year, the Cyrpto Taskforce asked the firms on board looking for revisions in the finance sector of UK to test their technology. In these trials they introduced a “proof of concept,” asking several firms, including payments technology providers Baton Systems and Token, R3 and Clearmatics, for feedback.
Britain’s government is keen for the United Kingdom to remain a leading center for fintech innovation like payments and blockchain. Thus, to maintain that image and remain a leading name in the international funds and finances market the Bank of England has slowly and steadily streamlined it’s options in the realms of crypto-tech and blockchain. Cryptocurrencies change more hands and make a greater exchanged net worth than bank’s traditional currency dealings, primarily is why the Bank of England never ruled it out completely, only waited for the right time to make a move towards it or around it.
Earlier, in January 2016, The Chinese Central Bank issued a statement that declared a move towards issuing it’s own cryptocurrency due to the added trade and monetary advantages. The technology was dissected and a course of action was created by a star-lit panel from the financial world. It included the governor of PBOC, Zhou Xiaochuan, deputy governor, Fan Yifei, and currency experts from Deloitte and Citibank, among other currency experts. This allowed a demanding thrust of service and crypto desirability into the Bank of England.
Bank of England had passed a statement on the authenticity of Bitcoin based on whether it is a good store of value or not. It claimed that Bitcoins are rather used as an asset and not as a medium of exchange. This limits the relevance of it to the bank. However, the sadist relationship between the Central Bank of UK and Bitcoin, developed new colors as Bitcoin gained momentum in the past 2-months.
Now Berlin, Paris and other EU cities are seeking to involve fintech firms from Britain, worried about access to the bloc’s single market after Brexit. The adoption is picking on a Butterfly Effect, strapped in snugly to change the international trade efficiency and pace for all parties involved.
According to the Bank of England;
A number of recommendations were received to ensure optimal access to central bank money.
Bank of England has intentionally worked around it’s image as a contemporary financial institute. Setting new industry standards and adaptation to FinTech advancements is proof that the Old Lady of Threadneedle Street is not a medieval bank by any chance.