Fnality, the UK organisation developing DLT-based wholesale payment systems, has completed its first live blockchain payments in sterling using an account at the Bank of England.

In what the company describes as a world-first, the live transactions used a digital representation of central bank funds in its Sterling Fnality Payment System (£FnPS) held by the Bank’s real-time gross settlement service.

Fnality said that Lloyds Banking Group, Banco Santander and UBS all played a “critical role” as initial participants in the £FnPS.

It added that the move brought together the “safety and institutional quality” of central bank funds in a systemic wholesale payment system with the “innovative functionality and resilience” of blockchain technology.

Fnality went on to say the initiative evidences the first foundations of a broader multi-jurisdictional vision – one that enables a “seamless global liquidity management ecosystem” by supporting new digital payment models for payment, payment versus payment (PvP), and delivery versus payment (DvP) transactions in wholesale financial markets and emerging tokenised asset markets.

The initial phase focused on ensuring system resilience and functionality in a live environment and will pave the way for establishing FnPSs in other core currencies including USD and EUR, onboarding more participant banks, it said.

Additional functionalities also expected to roll out as the initiative progresses include conditional payments, digital securities settlement, intraday repos, and intraday FX swaps.

“This marks the culmination of significant efforts by Fnality, our shareholders and participants, our key partners, as well as the UK authorities,” said Fnality UK chief executive Angus Fletcher. “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.”

Swiss National Bank recently launched a similar trial initiative in which it plans to test a wholesale CBDC in real-world environments.

The Swiss central bank said the trial would mark the first time a real wholesale CBDC has been issued in Swiss francs on a financial market infrastructure based on distributed ledger technology.

Fnality recently concluded a £78 million fundraise led by Goldman Sachs and BNP Paribas.

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