The Regulated Liability Network (RLN), a U.K. based regulated financial marketplace infrastructure operating across a global network of financial institutions, has successfully completed its United Kingdom discovery phase and now sets its sights on a use case with retail central bank digital currency (CBDC), as reported in their latest update.
During the discovery phase, the RLN explored three potential use cases: consumer domestic payment, wholesale cross-border payment, and securities settlement. They’ve chosen to proceed with the consumer domestic payment case for proof of concept. A significant aspect of this use case is the exploration of how ‘upgraded’ commercial bank money could coexist with a retail CBDC on the same infrastructure.
Among the reported benefits of the RLN is its ability to offer consistency by maintaining equilibrium between CBDC and commercial bank money. It facilitates measures to mitigate authorized push payment fraud, which occurs when payments are authorized to fraudulent merchants. Furthermore, it empowers consumers by giving them more control in case of undelivered goods, and improves overall settlement time.
Another compelling feature, the RLN would use a native settlement token that would place tokenized regulated money and digital assets on the same ledger. However, the tokenized liabilities would primarily remain as claims on the issuer and not on the RLN itself.
Interestingly, the RLN does not necessarily depend on blockchain technology for its operations even after considering five potential infrastructure architectures. Its design most closely resembles the “unified ledger” solution proposed by the Bank of International Settlements and the International Monetary Fund’s “trusted single ledger”.
The RLN’s future is undeniably complex, primarily due to the involvement of multiple non-bank parties and the complexity of the regulatory landscape. A wholesale cross-border payment use case might be the least feasible path moving forward due to intersecting jurisdictions, the participation of entities like central banks, and stringent regulatory requirements.
As we advance further into the digital age, systems such as the RLN, are integral for achieving a smooth transition towards a digital economy. However, it’s safe to adopt a cautious optimism regarding this endeavor making note of the decidedly complex landscape of multiple jurisdictions and intricate regulatory requirements in the future steps of this project.
Source: Cointelegraph
