UK Finance Ends RLN Experimental Phase for UK’s CBDC Implementation, Is Digital Pound On the Way?

• The Regulated Liability Network (RLN) is a major step towards implementing the UK's central bank digital currency (CBDC).
• It provides a shared foundation for traditional and decentralized financial institutions to handle digital money.
• The RLN's ability to streamline operations and reduce fraud can position the UK at the forefront of financial innovation.

The UK has been working on the digital pound since 2023, when The Bank of England (BoE) and HM Treasury published their first consultation paper.

On September 17, the UK Finance trade group finished an experimental phase for the RLN, specifically developed for CBDCs and tokenized assets.

Let's explore the RLN's role in the UK's journey toward its goal.

The Ultimate Platform for Innovation'

The RLM whitepaper explains that the traditional financial industry players use proprietary, private databases.

While shared ledger technology could offer a common platform for traditional and decentralized finance institutions, it's not enough - legal frameworks are equally important.

According to UK Finance, the RLN can host commercial bank money, electronic money, and CBDCs, allowing authorized entities to manage and settle funds, create tokens, automate transactions, and control access to funds.

The RLN would help British commercial banks to process $14.52T worth of transactionsannually.

UK Finance notes the current regulatory framework is flexible enough to support such a platform for innovation' but requires further policymaker engagement.

The experiment revealed that the RLN could serve as a bridge between new companies and traditional financial institutions, offering a standardized way for them to interact with payment services.

Additionally, the RLN could help meet the UK payments industry objectives set out by the Bank of England discussion paper. Namely, preserving the integrity of money and encouraging innovation in the UK payment industry.

To learn more, watch the RLN final report launch event live on Zoom.

Collaboration Before Regulatory DemandUK Finance, together with prominent financial industry players like Lloyds, Mastercard, NatWest, Standard Chartered, Virgin Money, Visa, Barclays, HSBC, and Citi, started the experiment in April.

They aimed to examine technical and legal aspectsand customer advantages in three use cases.

Initially, it focused on payment-upon-delivery for physical goodsto mitigate online fraud. Then, it tested the homebuying process to avoid conveyance fraud and concluded with settling bonds.

RLN has been a valuable industry collaboration to drive innovation compared to be driven solely by regulatory demand. ... We are taking the time to experiment and test - we're not making assumptions, and we'll drive ongoing development through an iterative build approach.Paul Horlock, CPO at Santander UKClosing Remarks

The RLN's experimental phase has demonstrated its potential to revolutionize the UK's financial system.

A shared platform for traditional and decentralized finance institutions can streamline transactions, reduce fraud, and drive innovation.

However, RLN's successful implementation will depend on overcoming interoperability and regulatory hurdles.

References

• About RLN and Its Contributors (The Regulated Liability Network)
• UK Finance announces successful outcome of Regulated Liability Network Experimentation Phase (UK Finance)
• The digital pound (Bank of England)

The post UK Finance Ends RLN Experimental Phase for UK's CBDC Implementation, Is Digital Pound On the Way? appeared first on The Tech Report.