In a press release, the BOE announced the successful use of Ripple’s Interledger Protocol to make two simulated Real Time Gross Settlement (RTGS) payments.
- that the Interledger Protocol was able to support synchronisation of payments between two simulated RTGS ledgers;
- that the ILP Validator created a single source of truth between the two ledgers, eliminating the need for separate processes such as mutual reconciliation between separate ledgers;
- 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 proof of concept allowed the BOE and Ripple to begin exploring these questions.
RTGS is where financial institutions hold their sterling bank accounts. Like any account holder, these institutions can store balances (“reserves”) in these accounts, or use them to make payments. The BOE has been operating RTGS since 1996 to provide a safe and immediate way for banks to exchange payments.
This proof of concept focused on a high-value cross border payment scenario in which transactions in two different currencies were executed simultaneously in two different simulated RTGS systems that could represent two different countries.
The Ripple solution utilised by the Bank was built around the open source Interledger Protocol that enables payments to be made across different ledgers and networks across the world.
The BOE claim to have successfully integrated the Ripple solution with two simulated RTGS systems, hosted in the cloud, and demonstrated that they could process a successful cross-border payment across two RTGS systems simultaneously.