The Bank of England's "Real Time Gross Settlement Payment System" (RTGS) - the UK's equivalent of the US FedWire - has gone offline this morning due to a technical glitch, according to The Telegraph. RTGS, which processes large payments in real-time (including home purchases) between British banks - and processed GBP70 trillion in payments across 5000 entities last year - has been down since 6am London time (the fault was disclosed over 5 hours later at 1130 London Time). For now the largest payments are being processed manually and smaller payments are on hold.
The infrastructure that processes large payments including house purchases between British banks has gone offline, the Bank of England has said.
The central bank said the “Real Time Gross Settlement Payment System” (RTGS), which settles large transfers between banks, had gone offline, and remained so on Monday morning.
It said that the biggest payments were being processed manually and reassured the public that all payments would be on Monday.
The RTGS is set up to settle large payments in real time, rather than at the end of the day, reducing risk.
The system - which processes payments such as house purchases - has been down since 6am on Monday morning. The large banks were contacted early in the day, and the Bank disclosed the fault at around 11.30am.
The RTGS routes payments made through CHAPS (the Clearing House Automated Payments System), which settles important and time-sensitive payments, including house purchases.
According to the CHAPS website, it processed £70 trillion of payments last year and is used by 5,000 financial institutions.
Why is this serious?
The system helps keep the day-to-day running of banks going by acting as an intermediary between banks. If a payment is going to be made between banks, RTGS credits the bank receiving the funds quickly, and takes funds from the bank sending money, removing the risk for the receiving bank.
In effect, RTGS sits at the top of the payment structure for banks, as shown by this Bank of England document:
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Nothing to see here, move along...