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Hello, I'm Rupert Harri, the managing
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editor of City AM and today we are at
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City Week when we're talking about AI
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and digital payments and everything in
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between. I'm sitting here with Victoria
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Cleland, uh, chief executive of payments
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and chief cashier. Is that correct? At
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the Bank of England. Yeah. Thank you for
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joining us. So I wanted to start with
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just a brief overview of what your role
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actually entails and how does that work
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and help the economy function. Yeah, the
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sort of two elements of my role and
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bringing them together, it's essentially
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fulfilling the Bank of England's remitt
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in relation to payments, both electronic
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payments but also cash. So as chief
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cashier, I'm responsible for the
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distribution of design of Bank of
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England banknotes and as executive
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director for payments. My team run the
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real-time growth settlement system which
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supports chaps and also supports all the
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retail systems. But 800 billion a day
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goes through RTGS. So it's absolutely at
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the heart of the financial system. That
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is a that is a lot of money and makes a
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big number. It's integral to the
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functioning of the economy. Right.
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Absolutely. I mean payments are the
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lifeblood of the economy. Sometimes
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people think oh well payment systems
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that's just to do with the payment
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industry. Actually every single person
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is reliant on the payment systems. It is
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the heart of what we do. It is so
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tangible. It's key for retail payments,
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the financial markets, crossber
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payments. You recently did an upgrade to
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this system. That's right. We um have
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recently finished a new program to renew
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the RTGS system which was a piece of
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collaboration with industry over a
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number of years. is we started by saying
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to the industry, what would you like the
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new system to be able to do? And so we
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sort of set four core objectives. One
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was around enhancing resilience,
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something central banks love. Yeah. Um
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but we also wanted to think about
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competition and innovation. So in
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addition to the resilience piece, we
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were broadening access to enable more
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players and different types of players,
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for example, non-bank payment service
2:11
providers to join the system. We wanted
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to increase user functionality. So we've
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introduced some APIs, enhance liquidity
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saving mechanisms and also to increase
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interoperability either with systems
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domestically or cross border and as part
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of that we introduced ISO 2082 messaging
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which is a different language for
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payments to talk in but it means that
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payments in different countries are
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speaking the same language and using
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more data which means that for the banks
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and financial institutions they can
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learn more about their customers. as it
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enhances straight through processing.
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That's a snapshot of what we've been
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trying to do. Yeah. With that much money
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at stake and that much critical
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infrastructure, how do you even start
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overhauling a system like that? You said
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multiple years, where do you begin? So
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the starting point was really what do we
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want to do? um and so consulted with
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industry and then you're right you need
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to think what is a safe way to do this
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because the real-time growth settlement
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system is a sort of the core ledger it's
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essentially saying whose money is where
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you can't do it incrementally all the
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money's got to be on one ledger so we
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knew it had to be a big bang which meant
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that when we were approaching it we were
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saying are there different pieces we can
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do first we decided actually we'll do
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the ISO migration so the messaging
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first to get that piece done and there
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was a lot of work there for industry who
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were fantastic in being ready and then
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the next bit was um the core settlement
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engine I always call it the beating
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heart of RTGS which is where we were
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yeah literally transplanting something
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new in so working really carefully with
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the suppliers working with industry lots
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of testing getting advice from national
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cyber security center in terms of the
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cyber resilience So bringing some
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experts in to make sure that we were
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doing the right thing with this
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absolutely core piece of structure in
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one go. So the we we split it into two
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key transition states. One was we called
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TS2.1 transition state 2.1 uh buzzy
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which was around ISO 2022 messaging and
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then the main the main switch over. Yep.
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It was in one go over must be a really
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stressful day week. It was actually
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remarkably calm. The team had done so
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much preparation. We'd had a number of
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dress rehearsals, sometimes just within
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the bank, sometimes working with
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industry because it's absolutely key
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that the participants could connect to
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the system. But by the time we got to
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the cut over the weekend, so the work
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began in anger at about 9:00 on the
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Friday night. Um, and then we made the
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decision on the Saturday evening and it
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was remarkably calm just because it was
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so so tried and tested. Went without a
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hitch. Yeah, it was. Well, that's good
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to hear. It was Yeah, it was more than I
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could ever have dreamt of that weekend.
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Okay, that I mean that's great. How
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often would you do something like that?
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Not every day. Thank you. Um the current
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the system that we've just retired was
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29 years old. So this was a big change
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but what we want to do going forward is
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to have much more incremental change. So
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the way that new system has been built
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is with a modular architecture which
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means it's easier to switch pieces in
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and out and also we built it as a really
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solid platform that we can make changes
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to and add new functionality. So for
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example at the moment the system is open
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12 hours 5 days a week. We have built in
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the capacity um and the capability that
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we could open near 24/7 at the point the
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industry want to do that. We've built in
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capacity for a lot more players than
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we've got like multiple times and we've
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also been thinking about how we would
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enable players using new technology for
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example D distributed ledger technology
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to connect to RT. So we've tried to
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future proof it in that way. That's
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something I was going to ask about is is
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the future of digital payments and
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future proofing things and it seems like
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you're already thinking five 10 steps
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ahead for how you can build the system
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out. Yeah, very much so. One of the
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things that I'm going to talk about a
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bit later at City Week is um something
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called synchronization which would
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enable us to link our RTGS system so
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central bank money ultimate risk-free
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asset to another ledger. It could for
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example be housing estate ledger. It
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could be another RTGS system to enable
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the transaction to take place
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all in one go. And so that is making a
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big change. So for example, if you
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wanted to buy a house um
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your solicitor could actually make one
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instruction and the money would move
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from your account and at the same time
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the loan registry would be updated.
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That's what we're trying to do. So using
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sort of technology to sort of apply to
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real life use cases. So that would strip
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out all of the all the all of the
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parties in the middle and just make it
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all streamlined. That's the idea. Yeah.
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To make it purely from the Bank of
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England's point of view. Like that's uh
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there would be no one else involved and
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it would be just make everything so
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seamless and we'd be working with um a
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sort of group of organizations we call
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synchronization operators. So we'd have
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our system here. You'd have the other
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ledgers there and the synchronization
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operator would sort of between the two
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almost like like a pipe. We would be
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enabling that. We'd be thinking about
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who the synchronization operators were.
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So that's sort of one of the ideas that
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we're working on at the moment. But
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we're also trying to think well what
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next and again start some wholesale
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experiments and things. Well, talking of
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what next, what's your most exciting
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thing you're looking forward to in the
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I think it's really seeing industry make
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more use of the system that we've just
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built. So there's a lot of work that
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went into it for industry as well. It's
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been going um two months now and I think
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we're seeing a big uptick in sort of use
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of the APIs on the system. I want
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industry to use ISO more and then I
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think if we get synchronization up and
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running in live that will be really
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transformational. Be really exciting.
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All right. Well, thank you very much for
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your time today. Thank you.
