A new RTGS service for the United Kingdom: safeguarding stability, enabling innovation

We are consulting on the next generation of our Real-Time Gross Settlement (RTGS) service.
Published on 16 September 2016

For more information see the Payments and settlements page.

What is the RTGS service?

RTGS is not a household name, but it is at the heart of our mission for monetary and financial stability. RTGS is a payment system that provides the platform for sterling central bank reserves (the electronic counterpart to banknotes), and the ultimate risk-free means of final payment. On an average day, RTGS settles around £500bn between banks – almost a third of the UK’s annual GDP. Because of its importance, we must anticipate the demands that could be placed on RTGS in the medium term, and safeguard its stability while also enabling innovation in a rapidly changing payment ecosystem.

RTGS user research

Our consultation paper is informed by an outreach programme launched in January 2016 by Minouche Shafik, Deputy Governor for Markets and Banking. Our dedicated review team has met with current users and potential future users of the service, authorities, payment system operators, experts, and broader public interest groups. These stakeholders highlighted five key requirements for the next generation of RTGS system. These are that the service must:

  1. Be capable of responding to the changing structure of the financial system.
  2. Recognise that payment system users want simpler and more resilient pathways for their payments.
  3. Be capable of interfacing with a range of new technologies being used in the private sector, including distributed ledgers, if/when they achieve critical mass.
  4. Remain highly resilient to the increasingly diverse range of threats to continuity of service.
  5. Have the capacity to support the future evolution of regulatory and monetary policy tools.

Stakeholders agreed that now was the right time for us to develop the next generation of RTGS. They strongly encouraged us to continue to make safeguarding the payments system’s overall stability our primary objective, through a highly reliable, resilient and robust method of providing real-time gross settlement in central bank money of the largest, most system-critical payments in the economy. 

Our proposals for the RTGS system

We have chosen proposals that are consistent with both this primary objective of protecting the payment system’s stability and our strategy for enabling financial innovation, efficiency and competition. This is aimed at contributing to the UK’s medium-term economic prospects and safeguarding financial stability by reducing market concentration, identifying new risk-reducing technologies, and increasing the scope for electronic settlement in central bank money.

Our proposals are aimed at delivering a new RTGS system that is resilient but flexible, with a high proportion of payments in the UK economy continuing to take place in (or backed by) central bank money, however the structure of financial markets and payments technology develops. Our proposals are intended to provide broader access, higher resilience, greater interoperability, and a wider range of user functionality compared to the RTGS of today. These proposals are set out in full in the consultation paper. 

A key part of delivering these changes will be a comprehensive rebuild of the RTGS technology platform. We will make decisions on its resilience, including in particular its cyber defences, in consultation with intelligence partners. The cost of the rebuild will be recouped from future users in the normal way over time through a temporary increase in the RTGS tariff. A timetable for delivery of the new service will be published in 2017, with the provisional aim of completion in 2020. 

Andrew Hauser, Executive Director for Banking, Payments and Financial Resilience, said: 

“The world of payments is changing rapidly, and central banks need to keep pace if we are to deliver our mission of monetary and financial stability effectively in the years to come, whilst also enabling innovation and competition where we can. The proposals in this consultation document set out the changes the Bank of England believes are needed to deliver a new generation of RTGS service to meet that challenge. Taken together with prospective reforms to retail payments underway in the industry, these changes are designed to keep the UK payments infrastructure at the leading edge globally whilst underscoring our commitment to maintaining stability and confidence.”

PDFConsultation paper 

PDF Press release

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