The breakdown in service is a big embarrassment for the UK's central bank, coming in the year that the Clearing House Automated Payment System celebrated its 30th anniversary as the 'unsung hero of the financial system'.

Chaps is responsible for processing over 92% of all intra-bank payments by value in the UK, handling an average of £277bn of payments per day.

The system failed to open at the usual 6am start to the day, with the Bank saying that the most important payments would be made manually until the problem is resolved: "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."

But as the fault continued to stretch into the afternoon with no word from the Bank about when Chaps would re-open for business, questions were being asked about the central bank's backup plans. In February, the Bank of England became the first central bank to go live on a new Market Infrastructure Resiliency Service (Mirs) from messaging network Swift.

At the time, Chris Salmon, executive director of banking services and chief cashier at the Bank of England, remarked: "This is an important step forward in the resilience of the UK's RTGS infrastructure. Banks that settle payments through the Bank of England should be assured that the RTGS will continue to operate even under the most extreme conditions."

In a separate statement, Chaps said it would extend its operational hours until after the daily close to ensure that all payments in the queue are processed.

It's an unfortunate turn of events for the central bank, which has been particularly critical of the technical problems suffered by some of the UK's biggest banks in recent times.

Update:

In a statement, issued at 16:00 BST, Chaps says: “The Bank of England’s RTGS system is now processing payments again following a resolution of the technical issue experienced earlier today. As such, Chaps is now processing the backlog of payments and is confident that all payments submitted today will be processed today. To help customers and to ensure payments can be processed today Chaps is extending its operating times until 19.40 hrs. Customers are advised to contact their own bank for any queries they may have on their specific payments.”

Chaps officially closed for business at 20.00 and all 142,759 payments submitted to RTGS before the extended deadline were processed.

The Governor of the Bank of England, Mark Carney, has launched an independent review of the causes of the unprecedented disruption.  "The review will cover the causes of the incident, the effectiveness of the Bank’s response and the lessons learned for future contingency plans," says the Bank. "Its findings will be presented to Court which will then publish the full report and the response."