The Bank of England has teamed up with artificial intelligence and blockchain firms in a bid to improve the way it executes monetary policy.
The central bank is testing an artificial intelligence system with Canadian start-up MindBridge AI to allow it to spot anomalies in financial transactions.
"We are using it to explore the benefits of machine learning for analysing the quality of regulatory data input," the BoE said.
Additionally, it is working with Ripple, the San Francisco-based start-up, in a tie-up that marks the first instance of a central bank exploring how it can use blockchain technology that would make cross-border payments and the movement of currencies more immediate.
The Ripple pilot is to do with the synchronised movement of two different currencies across two different real-time gross settlement systems. And, the tie-up comes as the BoE works towards a 2020 timeframe for the overhaul of the country's real-time gross settlement system.
"The aim is to show how this kind of synchronisation might lower settlement risk and improve the speed and efficiency of cross-border payments."
Blockchain, the technology which underpins crypto-currencies like bitcoin, is pretty much proven. ATB Financial, the Canadian bank, sent US$1,000 to Germany’s Reisebank in only eight seconds using the Ripple protocol last year.
Moreover, Santander has created an app built on the blockchain that facilitates international payments. Users can transfer between £10 and £10,000 and payments can be made from sterling to euros and US dollars.
A BoE team is already looking at the monetary and fiscal policy implications of the rise of blockchain and cryptocurrencies and developing a central bank-issued digital currency.
This idea of putting the fiat currencies on a blockchain was were discussed back in June at a blockchain forum hosted by the Federal Reserve, the World Bank and the International Monetary Fund and was attended by central banks from over 90 countries.
Specifically, all central banks are looking at the benefits of blockchain-based national fiat currencies and whether public blockchain-based prediction markets experiments can be used to improve the design of monetary policies and global reserve currency arrangements.
BoE also said its fintech accelerator program is setting up a 'community' for the fintech sector to help it keep up with the big changes in the industry.
Fintech community members will be invited to meet with the Bank two to four times a year to share updates on trends and developments in the sector and participate in quarterly networking and knowledge-sharing events, the UK central bank said in a release.
Launched in June 2016, the central bank's fintech accelerator seeks to work in partnership with third-party tech firms to help provide insights on new approaches to Bank operations and wider marketplace developments.