UK Finance, a trade association in the banking and finance industry based in the United Kingdom, has announced the initiation of an innovative phase that will focus on the U.K. Regulated Liability Network (RLN). Eleven member organizations will be participating in this experiment.
The aim of this experimentation is to explore technical and legal aspects, as well as the benefits for customers, through three different use cases. Firstly, the focus will be on payment-upon-delivery for physical products, with the objective of reducing online fraud.
Secondly, the homebuying process will be examined in order to enhance customer transparency and minimize conveyance fraud, which involves selling an asset to avoid paying a creditor’s claim. Lastly, digital money will be used for digital bond settlement in the final case study.
These experiments will be aligned with Project Rosalind, a collaborative initiative between the Bank for International Settlements and the Bank of England, which concluded in June. Project Rosalind investigated the use of application programming interfaces (API) in the interactions between banks and central bank digital currency (CBDC). The functionality of the U.K. RLN will be assessed in a technical sandbox.
The results of these experiments are expected to be published in the summer. UK Finance previously released the results of its RLN exploration phase in September.
The participants in this experimentation include Barclays, Citi, HSBC, Lloyds Banking Group, Mastercard, NatWest, Nationwide, Santander, Standard Chartered, Virgin Money, and Visa.
Source: Dagnum P.I.
The RLN was introduced in November 2022 and aims to bring together assets and liabilities on a unified ledger, with a focus 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 July, the Federal Reserve Bank of New York Innovation Center, the SWIFT global messaging service, and nine major 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 proof-of-concept included Citi, HSBC, and Mastercard, all of which are also participating in the UK RLN experimentation.”
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