Given the amounts that were going through, that was obviously unacceptable. The volume and value of transactions travelling through the Chap system every day is quite large. You are looking at 80,000 transactions, or over pounds 150bn.
Introducing the RTGS eliminated the element of risk. It was a risk that could be avoided, and was therefore well worth a three-year project. Two things made RTGS possible. First, technology had moved on so that real- time payment settling had become a possibility. And the banks understood much better the nature of the risks they were taking.
I was leading the bank part of the project. The project itself took three years, from the initial go-ahead to completion. It was terrifically satisfying when the project went live. The operation of the RTGS is one of my responsibilities, but I don't have much to do with it day to day, other than to make sure everything is going smoothly, and to think about ways of development, and policy questions such as what other developments there may be, or any big issues the banks want to talk to us about.
Which brings me to another reason why RTGS is so exciting. Since January, something called the Target system has been sending euro payments right across Europe. But because the Bank of England had introduced RTGS in 1996, it meant that RTGS could be immediately integrated with the UK part of the Target system. The technology we use with RTGS is also the basics of the Pan-European Target system. Although this didn't make setting up the Pan-European Target system less of a feat, the RTGS provided the right foundation, and so made the euro project easier.
There aren't many glitches. Unsurprisingly, we had to have an extensive period of testing before we introduced RTGS, and that took up the best part of a year. The Bank of England had developed the RTGS core within the Bank, and each of the banks also developed its own project. Plus there needed to be a central project to make sure that all the banks could communicate with a shared piece of software.
Once we had done all our development, we tested each bank separately, as well as all of them at once. When we went live, it was remarkably smooth. That is the nature of the system; you don't take unnecessary gambles.
As with most systems that involve moving a lot of money, we don't control the system with people; it is highly automated. There are staff in the bank looking after the central system, and they check operations - for instance, they have to make sure that certain functions that should be happening are happening, and see whether there are any error messages. Does a file have enough capacity? Are the instant processes occurring? You need people to respond to anything when the computer says: "hang on a minute."
Like most computer systems, it's not desperately photogenic. The main engine room is a highly secure area, and for obvious reasons we don't let people wander in. In the system control area it's just a PC on a desk.
Nevertheless, this is the most impressive bank system development in recent years. These systems are very much at the heart of banking. After all, when you are moving money it needs to be done efficiently and without errors. And that is the prime role of technology.
Interview by Jennifer Rodger