The recent use case tests conducted by UK Finance in collaboration with Quant, R3, DXC Technology, and Coadjute have revealed that the Regulated Liability Network has the potential to unlock new functionalities within the UK’s financial system. The report also highlights the adaptability of UK regulations to support the operations of the network.
UK Finance Successfully Completes Experimentation Phase of Regulated Liability Network
UK Finance, a collective of more than 300 institutions offering banking, intermediation, and payment services, has released a report detailing the findings from the experimentation phase of the Regulated Liability Network (RLN). This initiative, which integrates central bank money, commercial bank money, and electronic money on a shared ledger, aims to modernize the existing financial infrastructure, including tokenized assets.
The project enlisted the expertise of Quant, R3, DXC Technology, and Coadjute to assess its feasibility through various use cases that utilized a unified Application Programming Interface (API) to communicate with different ledgers. Major players in the financial industry such as Barclays, Citi, HSBC, Lloyds Banking Group, Mastercard, Natwest, Nationwide, Santander, Standard Chartered, Virgin Money, and Visa, were actively involved in the experimentation process.
Following the experimentation phase, it was concluded that when integrated with other monetary initiatives, the platform has the potential to generate economic value and foster innovation in financial markets. Additionally, the RLN can introduce new functionalities such as programmable payments and the ability to lock and unlock funds based on specific use cases.
The report also suggests that a standardized interface would streamline processes for firms by simplifying interactions within the complex financial landscape, enabling seamless connectivity with other institutions through a single network. Furthermore, the report affirms that UK regulations are sufficiently flexible to accommodate the implementation of the RLN.
Jana Mackintosh, Managing Director of Payments, Innovation, and Operational Resilience at UK Finance, underscored the significance of the successful experimentation phase.
She commented:
The successful RLN experiment underscores the transformative potential of technology in enhancing the customer experience and driving economic value and societal benefits. The private sector is eager to invest in the future of commercial bank money but requires a collaborative partnership with regulators to achieve this.
Share your thoughts on the latest report on the Regulated Liability Network in the comments section below.