UK Finance Unveils Next Phase of RLN Trials, Exploring Financial Innovation

UK Finance has announced the commencement of experimental trials for the Regulated Liability Network (RLN) in the UK. The aim of the RLN is to establish a unified 'platform for innovation' by integrating tokenized deposits with traditional deposits using a shared ledger. Major British banks, including Barclays, HSBC, and NatWest, along with card firms Mastercard and Visa, are collaborating on the initiative. The project seeks to evaluate the benefits of a shared platform through the development of a prototype and trials, with a report to follow exploring customer advantages and technical and legal implications.

UK Finance Announces New Phase of Regulated Liability Network Trials

London, United Kingdom - UK Finance, the leading trade association representing the UK banking and financial services sector, has announced the commencement of a new phase of experimental trials for the Regulated Liability Network (RLN). The RLN is a transformative initiative aiming to establish a shared platform for financial innovation, integrating tokenized and conventional deposits within a secure and regulated environment.

Collaboration of Major Financial Institutions and Technology Partners

The RLN trials have garnered the participation of all major British banks, including Barclays, Citi, HSBC, Lloyds, NatWest, Nationwide, Santander, Standard Chartered, and Virgin Money. Additionally, global card giants Mastercard and Visa are lending their expertise to the project.

Recognizing the crucial role of technology in realizing the RLN's potential, UK Finance has partnered with R3 and Quant as technology providers. R3's Corda enterprise blockchain platform will serve as the underlying infrastructure, while Quant will contribute its innovative distributed ledger technology (DLT). DXC Technology will lead the technical implementation, ensuring seamless integration and interoperability.

Project Coordination and Governance

UK Finance serves as the project coordinator, providing overall oversight and guidance. The organization is supported by EY, a leading global consulting firm, and Linklaters, a prominent international law firm, which will provide legal and regulatory expertise.

Commenting on the project's significance, Jana Mackintosh, Managing Director of Payment Innovation and Resilience at UK Finance, stated, "This project will rigorously test the hypothesized benefits of the RLN as a platform for innovation. The insights gained will be pivotal in future-proofing and advancing the UK's financial infrastructure."

Innovative Use Cases

The RLN trials will focus on evaluating three distinct use cases that showcase the potential of the shared platform. These use cases encompass:

• Fraud Prevention for Online Purchases: Utilizing conditional payments that settle upon delivery of goods, this application aims to significantly reduce fraud in e-commerce transactions.
• Digitized House Transactions: In collaboration with DLT firm Coadjute, this use case will explore the streamlined and secure processing of payments for property purchases.
• Delivery versus Payment for Digital Bond Transactions: This application will facilitate efficient settlement of digital bond transactions, ensuring timely delivery and payment execution.

Highlighting the transformative potential of DLT, Tiina Lee, CEO of Citi UK, remarked, "Shared ledger technology has the capacity to establish multi-asset settlement venues that operate 24/7 and can respond to the evolving needs of the rapidly evolving digital economy."

Technology and Regulatory Considerations

The RLN trials leverage the experience and expertise gained from previous initiatives. Quant's participation ensures continuity with the Bank of England's Project Rosalind, which explored the feasibility of a digital pound. Several participating banks, including Lloyds, Natwest, and Nationwide, have invested in Coadjute, which utilizes R3's Corda blockchain.

To ensure compliance with regulatory requirements, the RLN trials will adhere to the highest standards of financial regulation. The involvement of Linklaters will provide ongoing guidance and support to ensure the project's adherence to applicable laws and regulations.

The trials will continue until the summer of 2023, culminating in a comprehensive report that will assess the customer benefits, technology capabilities, and legal implications of the RLN. The findings will serve as a valuable resource for policymakers, financial institutions, and industry stakeholders as they navigate the transformative era of digital finance.