UK Finance, a trade association for the United Kingdom banking and financial services sector seeks to expand its pilot of an experimental shared ledger to track financial firm’s payments.
Perfect Participants for the Pilot Testing
With this offering, the association hopes to connect some of the disjointed dots in the nascent world of crypto.
According to UK Finance, top players across the banking sectors as well as other financial service providers have all joined the pilot testing phase for the proposed service. Some of these entities include Barclays Plc, Lloyds Banking Group Plc, Citigroup Inc., Mastercard Inc., and Visa Inc.
Gilbert Verdian, CEO at Quant, acknowledged that the pilot phase has been going on for the past two months. His firm, which creates interoperable blockchain networks, is focused on providing the technology needed for the pilot testing phase. UK Finance intends to publish the results from this testing by August.
This marks a significant milestone for the industry body as the move is a stepping stone towards building a viable commercial system that all banks can utilize for tokenized deposits and securities. It also comes after the Technology Working Group, by the UK government, came up with a report urging companies to consider working together towards achieving tokenization goals.
It is also part of a broader interest in unifying money systems present in jurisdictions. The Bank for International Settlement (BIS) already announced the launch of Project Agorá, a joint venture that unites global central banks and the private sector to enhance the monetary system through tokenization and smart contracts.
Benefits of Utilizing Tokenized Deposits
Markedly, this UK Finance tokenized deposits would gather more assets that are recognized as a token on a unified blockchain. In the long run, it is aimed at promoting easier and faster transactions across different borders and systems.
Additionally, these tokenized deposits will help financial service providers mitigate the occurrence of error or even fraud. There are no plans to commercialize the use of the trial platform just yet. Firms would be required to use the platform for about two to three years when all measures would have been put in place before it is opened for commercial implementation.
To this end, UK Finance will open up its doors to fintech startups and technology companies that wish to participate in the program from July. Once in the program, they will begin to test new products based on tokenized commercial bank money, per a statement from Verdian.
“Banks see the need for programmable payments today. It’s quite a game changer for them because business models can operate in a more efficient way because they are not limited by the shackles of the current payment system,” He revealed in a recent interview.
