David Gyori - BANKING REPORTS, LONDON - London 15 August, 2023, 09:50 0 likes

A great Great GREAT argument for DLT (Distributed Ledger Technology), such as BLOCKCHAIN!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 15 August, 2023, 12:57 1 like

Sorry mate Blockchain DLT hasn't processed GBP 1 Trillion IN ITS ENTIRE LIFETIME.

I can bet that if you try to put through the present UK RTGS TPV of GBP 1T a day on Blockchain, it will suffer lifetime outage from which it will never recover, let alone recover in six hours.

David Gyori - BANKING REPORTS, LONDON - London 15 August, 2023, 14:19 0 likes

I genuinely believe that the logic of Blockchain is PERFECT for interbank messaging, clearing and settlement (in one). YES, it is too early days to put a major system exclusively on it. 
Phases on Blockchain evolution will include: 
+ Prototypes
+ Pilots
+ Parallel Usage (central counterparty and DLT)
+ Preferred Usage
+ Primary Usage
and later on, maybe in the 2050s: exclusive usage. 

Andrew Smith - RTGS & ClearBank - London 15 August, 2023, 15:22 1 like

The outage shows that there is a strong need for the RTGS system to be upgraded sooner rather than later. It also shows the critical importance of two other, often overlooked aspects of such a systemic system:

1. CHAPS and the RTGS are too tightly coupled, a high value payment system shouldnt necessarily need to have the RTGS up all the time, therefore reducing any "blast radius" of an issue in the RTGS significantly

2. An RTGS really should have a resilient secondary system (not built on the same code base as per the primary, rather it should be a non-similar facilitaty (NSF)) that is used on a daily basis by all the members. If we had this system in place - then an outage would mean members of the SMF would simply see processing via the NSF. 

Andrew Smith - RTGS & ClearBank - London 15 August, 2023, 15:25 1 like

To follow on from the comments of DLT. I think we would find that any DLT solution would see nodes running under the control of the central bank and limited (non cloud) infrastructure. The resiliency benefit of DLT at that point would be pretty much the same as what we see today. In addition, operating a DLT is a signifincant technical uplift which introduces a number of challenges for the BoE and the SMF members. Why have such a heavy left for such a limited benefit.

There are much better ways of working that see an almost negligent level of investment required.

Andrew Smith - RTGS & ClearBank - London 15 August, 2023, 15:28 1 like

One question / food for thought. Should CHAPS be the only High Value Payment infrastructure the UK has? Since CHAPS is tied to the RTGS so tightly in the UK, should we not have an independent High Value Payment solution that is not CHAPS and not run by the BoE? 

This would remove the link between CHAPS outages and RTGS outages and therefore ensure significnat resilience in the UKs payment infrastructure. 

Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 16 August, 2023, 12:45 0 likes

By referring to technology in my previous comment, I just realized that I was stuck in a time warp.

Coming out of it, I realize the more pertinent issue out here is that of trust. Going by the events of the past year, no one will trust crypto / DLT with even a tiny fraction of the kinda money that flows through RTGS / CHAPS every day.

To slightly paraphrase @ByrneHobart, "Sloppily-built crypto companies are hacked by criminals. Well-built crypto companies are run by criminals."

David Gyori - BANKING REPORTS, LONDON - London 16 August, 2023, 12:56 0 likes

OK, but BLOCKCHAIN and CRYPTO are TWO DIFFERENT THINGS. 

There is 0 space for crypto in interbank payments.

There is great opportunity in the long run for Blockchain in interbank payments. 

Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 16 August, 2023, 13:08 0 likes

Oh c'mon, I also know that Blockchain and Crypto are technically not the same but I haven't come across too many blockchains shilled by non-crypto companies, so blockchain and crypto are the same for all practical purposes.

Jeremy Light - pingNpay - London 17 August, 2023, 11:15 1 like

This the second CHAPS/RTGS outage in nine years, which actually is a fairly good record.

Resilient payment infrastructures though tend to impede or constrain change/innovation as there is a little need/impetus to change.

Card and ATM switches are an example, some are so resilient they have run continuously for decades and banks/processors are reluctant to replace them hindering their ability to innovate.

A little known issue with the current BoE RTGS system is that there are very few windows available each year to on-board non-banks for settlement accounts to participate directly in the Faster Payments system, thus limiting the number of non-bank direct participants and the innovation they bring using instant payments.

This should change with the introduction of the new BoE RTGS next year and we should see the number of non-banks with BoE settlement accounts accelerate.

Hopefully this latest incident with the old RTGS will spur the BoE into keeping to their current implementation schedule for the new RTGS or even accelearting it rather than, out of caution, causing it to be delayed still further. 

David Gyori - BANKING REPORTS, LONDON - London 17 August, 2023, 11:18 0 likes

Jeremy, I agree!