The Bank of England's (BoE) Real Time Gross Settlement (RTGS) payment system has fallen foul of a technical glitch, causing the BoE to suspend the service until the problem is resolved.
The situation is something of a nightmare for bankers: the system transfers money between banks in real time, acting as an intermediary, and is a key part of the City's financial infrastructure.
The BoE has described RTGS as playing a "vital role in the safe functioning of the UK financial system and in fulfilling the Bank’s core purposes maintaining monetary and financial stability".
But the Bank insisted the most important payments would be made manually and issued a statement clarifying its position:
The 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. We 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.
RTGS channels payments through its Clearing House Automated Payment System (CHAPS), which was set up in 1984 and processed £70 trillion of payments last year.
The world's largest securities and transactions company Euroclear says it is working with the BoE to get things back up and running:
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.
The Bank helpfully provides a chart to show how much is transferred through RTGS on a daily basis:
(Credit: Bank of England)
The Guardian's Jill Treanor explains some of the implications of the today's "technical issue":
The Bank of England's CHAPS system has been down since 6am - could affect anyone buying or selling a house, or big payments between banks— Jill Treanor (@jilltreanor) October 20, 2014