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The Regulated Liability Network (RLN) has completed its United Kingdom discovery phase and is prepared to proceed to a use case with retail central bank digital currency (CBDC), according to its latest report. The RLN project seeks to accommodate central bank, commercial bank and regulated non-bank transactions operating within \u201cpartitions\u201d on a single network.<\/p>\n
The RLN is a regulated financial marketplace infrastructure in the U.K. with contributors from financial institutions worldwide. It is supported by the advocacy group UK Finance.<\/p>\n
The RLN discovery phase examined three potential use cases for the network\u00a0\u2014 consumer domestic payment, wholesale cross-border payment and securities settlement\u00a0\u2014 and settled on the first case to pursue a proof of concept. The report noted<\/a>\u00a0many domestic payment uses that could be tested and cited the list presented<\/a> in the results of Project Rosalind as examples. The report said: <\/p>\n \u201cThis use case would help explore how \u2018upgraded\u2019 commercial bank money could sit alongside a retail CBDC, how RLN could accommodate both forms of money on a single infrastructure, and how the functional equivalence of all retail digital money could be ensured.\u201d<\/p><\/blockquote>\n The report found that the RLN provided several benefits for domestic payment. It helped provide consistency between CBDC and commercial bank money, thus helping preserve the singularity of the currency. It could also help reduce authorized push payment fraud, that is, payments authorized to fraudulent merchants, and give consumers more control in case of undelivered goods. Finally, it would also improve settlement time.<\/p>\n The RLN would use a native settlement token and thus contain tokenized regulated money and digital assets on the same ledger. Tokenized liabilities (money) would remain claims on the issuer, rather than on the RLN.<\/p>\n Related: SWIFT says it has reached a \u2018breakthrough\u2019 in recent CBDC experiments<\/a><\/em><\/strong><\/p>\n The project completed a pilot program<\/a> for wholesale cross-border payments in conjunction with the New York Federal Reserve Bank and several large financial institutions earlier this year. Now, however, it says this particular use case \u201cmay be the least feasible for a PoC [proof of concept] due to the complexity of dealing with multiple jurisdictions, participants (including central banks) and regulatory requirements.\u201d <\/p>\n Securities settlement was judged to have a medium degree of feasibility due to the multiple non-bank parties involved and regulatory complexity. <\/p>\n The UK Regulated Liability Network, a blockchain network for interbank payments and other digital assets, plans to experiment with a retail digital pound backed by commercial bank money or tokenized deposits https:\/\/t.co\/HiGqfQz67I<\/a> \u2014 Digital Pound Foundation (@digitalpoundfdn) September 5, 2023<\/a><\/p><\/blockquote>\n The RLN does not crucially depend on blockchain technology. The report identifies five infrastructure architectures that it could operate on. The RLN closely resembles the \u201cunified ledger\u201d solution proposed<\/a> by the Bank of International Settlements and the International Monetary Fund\u2019s \u201ctrusted single ledger,\u201d also introduced in June<\/a>. The report\u2019s authors also noted the project\u2019s resemblance<\/a> to a pilot conducted by the Swiss National Bank and the SIX digital exchange, and Bank of England governor Andrew Bailey\u2019s proposed \u201cenhanced digital money.\u201d<\/a><\/p>\n\n
…#UK<\/a> #DigitalPound<\/a> #Tokenization<\/a> #Fintech<\/a> pic.twitter.com\/BUyoMtyfA6<\/a><\/p>\n