In a key development for wholesale finance and digital asset markets, the initiation of the Sterling Fnality Payment System (£FnPS) brings together the institutional quality of central bank funds in a systemic wholesale payment system with the functionality and resilience of blockchain tech.
Lloyds Banking Group, Banco Santander and UBS have all played “a critical role as initial participants in the £FnPS.”
The inaugural live payments in this first phase of the new digital FMI and regulated payment system have “taken place leveraging an Omnibus Account held by £FnPS in the Bank of England RTGS service.”
This milestone goes beyond just “demonstrating Fnality’s functionality — it evidences the first foundations of a broader multi-jurisdictional vision; one that enables a seamless global liquidity management ecosystem by empowering new digital payment models for payment (P), payment versus payment (PvP), and delivery versus payment (DvP) transactions in both wholesale financial markets and emerging tokenised asset markets.”
With this vision and regulatory context in mind, their focus now turns to scaling £FnPS operations in “a managed and phased approach.”
This initial phase, focused on “ensuring system resilience and functionality in a live environment, is subject to limits set by the Bank of England. Scaling operations will be subject to the £FnPS meeting the Bank of England’s operational and supervisory expectations for the next managed phase.”
This will pave the way for “establishing FnPSs in other core currencies including USD and EUR, onboarding more participant banks, and rolling-out a range of value-adding functionalities including conditional payments, digital securities settlement, intraday repos, intraday FX swaps, and more.”
Fnality appreciates the UK authorities’ commitment “to innovation and resilience which has provided a robust regulatory backdrop/framework in which Fnality has been developed. In April 2021 the Bank of England published their Omnibus Accounts Policy, a vital enabler of new payment and settlement models in central bank money.”
In August 2022, the Sterling Fnality Payment System “was recognised and designated by HM Treasury, bringing it into the regulatory remits of the Bank of England and the Payment Systems Regulator due to its likely systemic importance.”
£FnPS is now connected to CHAPS “to prove its provision of payments services in a live environment and joins the select group of payment systems that form the UK’s recognised payment infrastructure.”
During this initial phase, the BoE will continue “to assess £FnPS operations against regulatory expectations as we scale up to commercial operations.”
Angus Fletcher, CEO of Fnality UK, reflected:
“As we step into 2024, our focus sharpens on scaling up operations within a managed and approved framework as set out by the Bank of England, and steadily progressing towards unlocking new market use cases.”
Rhomaios Ram, CEO of Fnality International, shared:
“Today’s success is a major step in the wholesale payments and digital assets arenas, demonstrating the global potential of Fnality’s DLT-based payment systems.”