A proof of concept study into an interoperable network for wholesale payments has concluded that a global, near-real time, 24/7, dollar payment system could be delivered through the Regulated Liability Network (RLN) concept.
The RLN is a theoretical payment infrastructure designed to support the exchange and settlement of regulated digital assets. It would address issues with current traditional payment systems around speed, cost, off-hours availability and the settlement process. The study explored ways to address these while maintaining safe and efficient payments.
The study, carried out by a working group of members of the US financial services sector, successfully simulated two experiment payments — one with domestic interbank payments and one with cross-border payments in USD. It identified shared ledger technology as a potential solution to support payment innovation after successfully simulating both scenarios.
The three-pronged experiment explored the technical feasibility, business applicability, and legal viability of the technology when using it to settle the liabilities of regulated financial institutions through the transfer of central bank money.
From a business perspective, it found the benefits of the system arise from the orchestration of commercial bank and central bank tokens operating on a common ledger within a sound legal framework. Overall, it concluded that the system could be delivered through the RLN concept, which would enhance the processing of cross-border payments denominated in USD.
In terms of technical feasibility, the experiment found the proposed architecture was able to deliver the benefits of settlement finality, a common source of truth, standard transaction data, and privacy for all participants on the network.
Legally, there were no insurmountable legal impediments under existing U.S. legal frameworks that would prevent the establishment of an RLN system. However, the study found further analysis, research, and engagement with regulators would be required before a final conclusion was reached.