Bank of England (BoE) has effectively conducted a Proof of Concept (PoC) exercise in collaboration with Ripple that tested the applications of Ripple’s Interledger Protocol (ILP) for synchronizing Real-Time Gross Settlement (RTGS) payments in cross-currency forms.
The program aims to bolster the efficiency and security of cross-border payment flows between distinct financial systems. In the PoC, the BoE experimented with using Ripple’s ILP to facilitate coordinated cash movement between two notional RTGS systems.
Over time, RTGS has become a reserve system in which financial institutions maintain their accounts in Pound Sterling while offering an instantaneous and risk-free channel for payment interchange.
For almost three decades of using the RTGS system, the BoE has been examining improvements to implement new features that aid the synchronization of cash transfers. Apart from determining the benefits and costs, the organization noted Ripple’s Interledger Protocol for optimizing cash flow potential. As such, it is weighing the possibility of ILP as an acceptable technical solution for its future RTGS upgrade.
BoE recognition offers limitless opportunities
Ripple Labs’ core services are directly linked to the Bank of England, which emphasizes optimizing cross-border settlement.
Critically, the BoE has previously considered using Ripple technology. Just this year, the bank published a paper describing concepts for a digital version of the Pound Sterling, a potential Central Bank Digital Currency (CBDC) for the UK, to promote financial inclusion. Although the document favored Ripple, it did not cite any solutions.
However, the recent use of Ripple’s version of Interledger Protocol (ILP) by the BoE is a significant step forward for potential collaboration in the future. This announced effort further entrenches Ripple into the greater financial good and indicates that Ripple is gaining a presence worldwide.
The ILP has achieved precisely the capability that BoE asked for—matching payments across two simulated RTGS ledgers. This milestone and potential future projects could raise awareness of Ripple’s steadfast technology and garner widespread adoption of its products beyond that of the Interledger Protocol.
Ripple’s expanding ecosystem drives a year of innovation
In the last 12 months, Ripple Labs has made forceful advances into new frontiers of finance, from tokenization to Automated Market Makers (AMM).
Ripple introduced Ripple USD (RLUSD), a U.S. dollar-backed stablecoin with access to inclusive financial services to establish its position in the lucrative stablecoin niche.
Ripple also formed a partnership with BDACS to offer on-chain custody solutions for XRP and RLUSD. Their supporting institutional-purpose features were further strengthened by using South Korea’s digital asset storage model, which overlays regulatory compliance with the nation’s standards.
An important stride towards the institutional adoption of XRP came to light when the Saudi Arabia National Commercial Bank (NCB) joined RippleNet, which highlights Ripple’s ever-expanding global influence. At the same time, financial institutions across the globe are gradually adopting digital payment solutions.
Ripple’s bold steps move beyond payments to tokenization. Four months ago, it launched a $3.8 billion tokenized money market fund built on the XRPL, furthering its legacy of revolutionizing the digital asset markets. Ripple is preparing for a second revolution through its tokenization as it disrupts the stablecoin industry.
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