UK Finance, a trade association in the banking and finance industry based in the United Kingdom, has announced the initiation of a experimental phase that will focus on the U.K. Regulated Liability Network (RLN). Eleven member organizations are participating in this phase.
The purpose of these experiments is to address technical and legal issues, as well as explore the benefits for customers, in three different use cases. The first case will examine payment-upon-delivery for physical products, with the aim of reducing online fraud. The second case will focus on the homebuying process, aiming to improve customer transparency and reduce conveyance fraud, which involves selling an asset to avoid paying a creditor. Lastly, the experiments will explore the use of digital money for digital bond settlement.
These experiments will be aligned with Project Rosalind, a collaborative effort between the Bank for International Settlements and the Bank of England, which concluded in June. The project studied the use of application programming interfaces (API) in banks’ interactions with central bank digital currency (CBDC). The functionality of the U.K. RLN will be examined in a technical sandbox environment.
The results of these experiments are expected to be published during the summer. In September, UK Finance released the results of its discovery-phase RLN experimentation.
The participants in these experiments include Barclays, Citi, HSBC, Lloyds Banking Group, Mastercard, NatWest, Nationwide, Santander, Standard Chartered, Virgin Money, and Visa.
The RLN was introduced in November 2022 and focuses on placing assets and liabilities on the same ledger, with an emphasis on interoperability between regulated forms of money using blockchain technology. Peter Left, the head of digital and markets innovation at Lloyds Banking Group, stated in a press release:
“In July, the Federal Reserve Bank of New York Innovation Center, the SWIFT global messaging service, and nine large financial institutions successfully completed a proof-of-concept to exchange and settle commercial bank deposit tokens and central bank liabilities using a simulated United States CBDC. Participants in this test included Citi, HSBC, and Mastercard, who are also participating in the UK RLN experimentation.”
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