UK Trade Association’s Regulated Liability Network Experiment

UK Finance, a trade association for banking and finance in the United Kingdom, has announced the start of an experimental phase focusing on the U.K Regulated Liability Network (RLN). Eleven member organizations will participate in this phase, which aims to examine technical and legal issues, as well as customer benefits, in three different use cases.

The first use case will explore payment-upon-delivery for physical products, with the goal of reducing fraud in online transactions. The second use case will focus on improving customer transparency in the homebuying process, in order to reduce conveyance fraud – a practice that involves selling an asset to avoid paying a creditor. The third use case will involve the use of digital money for digital bond settlement.

These experiments will align with Project Rosalind, a collaborative effort between the Bank for International Settlements and the Bank of England, which concluded in June. Project Rosalind studied the use of application programming interfaces (API) in the interactions between banks and central bank digital currency (CBDC).

To examine the functionality of the U.K. RLN, a technical sandbox will be used during the experimental phase. The results of these experiments are expected to be published in the summer. UK Finance has previously released the results of its discovery-phase RLN experimentation in September.

Participants in the RLN experimentation include Barclays, Citi, HSBC, Lloyds Banking Group, Mastercard, NatWest, Nationwide, Santander, Standard Chartered, Virgin Money, and Visa. The RLN was introduced in November 2022, and it aims to place assets and liabilities on the same ledger, focusing on interoperability between regulated forms of money using blockchain technology.

Peter Left, the head of digital and markets innovation at Lloyds Banking Group, expressed enthusiasm for RLN, stating that it can unlock new features for customers’ money in various retail and wholesale use cases.

In July, the Federal Reserve Bank of New York Innovation Center, the SWIFT global messaging service, and nine major financial institutions completed a proof-of-concept to exchange and settle commercial bank deposit tokens and central bank liabilities using a simulated United States CBDC. Some of the participants in this proof-of-concept, such as Citi, HSBC, and Mastercard, are also involved in the UK RLN experimentation.