The RLN initiative proposes an infrastructure for managing a variety of regulated digital money on an interoperable network. The infrastructure aims to facilitate programmable payments and tokenised commercial bank deposits to improve security, reduce fraud, and increase efficiency in several financial activities including property transactions.
It was introduced in November 2022 with a pilot, followed by an "experimentation phase" announced by UK Finance in April 2024. The experimentation phase looked at various technical, legal, and business case questions surrounding the development of the platform and the main conclusions were as follows:
- Such a platform, in collaboration with other important initiatives such as Open Banking, could deliver economic value and support innovation in the market.
- New functionality, such as programmable payments and locking/unlocking of funds, was demonstrated across a range of use cases.
- It could provide new and innovative firms with a common point of access to enable them to interface with established institutions, and enhanced payment and settlement systems.
- The legal and regulatory framework of the UK is sufficiently flexible to support the implementation of a ‘platform for innovation,’ subject to further implementation and regulatory engagement.
Across the use cases explored, several potential benefits were discovered, including reducing fraud, improving efficiency in the process of home buying, and reducing the cost of failed payments in the UK.
Recently the UK Finance announced a live pilot phase to deliver tokenised sterling deposits (GBTD), building on the earlier phases of the RLN project. Representing a digital evolution of traditional commercial bank money, these tokenised deposits will aim to retain the trust and regulatory protections of conventional deposits while offering benefits such as enhanced speed and fraud prevention.
The pilot, running until mid-2026, will focus on three use cases:
- Person-to-person payments via online marketplaces: reducing fraud and enhancing buyer and seller confidence.
- Remortgaging processes: improving transparency, speeding up transactions, and mitigating conveyancing fraud.
- Digital asset settlement: connecting tokenised customer money to digital assets for seamless exchange.
With participation from major UK banks, the platform will be interoperable with various digital money forms and offer tokenisation-as-a-service for broader participation.
Next steps and considerations for firms
UK Finance and its members are welcoming further engagement with regulators and other public bodies on the initiative. It will host engagements and events throughout the GBTD pilot to provide all stakeholders with updates on the work and next steps.
While the RLN project presents significant opportunities for banks and payment service providers to innovate, reduce costs, enhance customer trust, and access new revenue streams, it also presents significant risks which these firms should consider as the project develops. Some of the possible risks explored during the experimentation phase included capability to reconcile the RLN with existing bank accounting systems, manage integration costs, and ensure the resilience and cybersecurity of the platform.
Further work is needed to establish viable commercial models, including sustainable governance and funding, to deliver programmable payments and settlements. There is also a need to develop specific dispute resolution frameworks for third-party applications integrating with the RLN and to ensure compliance with data privacy and consumer protection requirements. Banks and payment firms should engage proactively in industry and regulatory discussions to shape the future design and governance of the RLN.
