#2: The Bank of England’s RTGS CHAPS Renewal Program

26 May

25th May 2022

With:

| John Jackson (Bank of England)

| James Southgate (Bank of England)

In Session #2, John Jackson and James Southgate (Bank of England) provide an exclusive look at the RTGS Renewal Programme. As the payment landscape undergoes its most rapid transformation in history, the Bank is moving from a legacy "monolithic" system to a modular, flexible architecture designed for the 2020s and beyond.

The guests discuss why this renewal is a response to both technological opportunity and systemic necessity. The transition focuses on increasing resilience, fostering competition by lowering barriers to entry for non-bank payment service providers, and adopting the ISO 20022 messaging standard. This project represents the Bank's vision for a "future-proof" system that can interoperate with Distributed Ledger Technology (DLT) and support the G20’s goals for faster, cheaper, and more transparent cross-border payments.

The session covered:

Drivers for Renewal: Why the aging infrastructure needed to be replaced to handle the explosion of digital payment volumes and the rise of new fintech players.
The ISO 20022 Catalyst: How the shift to a common, data-rich messaging standard is the foundation for the entire renewal, enabling better fraud detection and automated reconciliation.
Expanding Access: The Bank’s strategy for widening access to RTGS for non-bank financial institutions, promoting competition and reducing the risks inherent in "tiered" banking models.
Interoperability with DLT: Exploring how the new system is designed to connect with decentralized platforms and "external" ledgers, ensuring the Bank stays at the center of the value exchange.
Cross-Border Efficiency: How the renewed RTGS will support the global roadmap for enhancing cross-border payments by reducing friction in correspondent banking.
Beyond 2024: A look at the "Next Generation" features, including potential 24/7 operating hours and synchronization services that allow for atomic settlement across different systems.
The Tiered Access Scheme: Addressing the future of CHAPS participation and how the Bank manages the risk of smaller players relying on larger "settlement banks."