Those overseeing sizeable transactions within the UK were dealt a deadening blow today, as the system used by Britainís central bank to process and transfer large amounts of money suffered a technical glitch rendering it defunct from around 6am this morning.
The Bank of England announced that their ëReal Time Gross Settlement Payment Systemí (RTGS), which processes large payments between banks, had been suspended. Given RTGSí average daily rate of £277bn in processed cash transfers, this is alarming news indeed for financiers and businesses alike.
In one of its online publications, the BoE described RTGS as fulfilling a "vital role in the safe functioning of the UK financial system and in fulfilling the Bankís core purposes maintaining monetary and financial stability".
However, the Bank have released a statement insisting that the largest payments will be carried out manually and that all payments yet to be transferred will be by close of play on Monday, as the system can function at a high level when it comes back online.
Britainís largest lenders and individuals unlucky enough to be purchasing or selling a property are the entities most likely to be affected by the settlement agentís failure, whilst those fretting over direct debits and standing orders can rest easy as these are regulated by an alternate system. Banks were notified shortly after 6am, and the BoE made the technical error public a short time after 11am this morning.
The ëChaps Systemí, as the Clearing House Automated Payment System is colloquially known, processes 92% of bank-bank transactions and is also the prevalent system in the administering of expensive transactions, such as property purchase.
Phil Kenworthy, managing director of Chaps, said the system was currently unable to process any payments. ìChaps is liaising with the Bank of England, which is working hard to resolve the issue ñ which means payments submitted today will be processed. Chaps will be extending its operational day to enable its participants to submit and receive Chaps payment instructions later than normal,î he said.
ìThe Bank of England has identified a technical issue related to some routine maintenance of the RTGS payment system and has paused settlement while we resolve it,î a statement from the Bank said.
ìWe are working to address this issue as quickly as possible, and restart the RTGS payment system in a controlled manner. The most important payments are being made manually and we can reassure the public that all payments made today will be processed.î
RTGS is also deployed by leading payment system, CREST, which handles shares-related and bonds-related transactions. Despite the BoEís technical difficulties, CREST is believed to be unaffected. Euroclear, the body which owns CREST, released a statement saying:
"Euroclear is monitoring the current technical issue with the RTGS system at the Bank of England. We are working closely with the BoE and if necessary will extend our own operational deadlines, to ensure that all settlement and payment instructions will be processed today."
Chaps will function beyond its usual closing time of 4pm in order for the dayís quota of transactions to be completed.
Todayís debacle marks a forgettable episode for the Bank of England, with critics lamenting it as a central bankís worst nightmare. Customers awaiting payments or wondering where their expected funds are from a transaction ought to contact their lender immediately.