The Bank of England, the Monetary Authority of Singapore and the Bank of Thailand have finished testing a cross-border FX settlement prototype that links traditional and distributed ledger systems. The accompanying policy report flags open questions on resilience, finality and governance, and the BOE plans a live interface in 2028.
Three central banks have completed tests of a cross-border foreign exchange settlement system connecting traditional payment infrastructure with distributed ledger technology.
In a joint statement on Friday, the Bank of England, the Monetary Authority of Singapore and the Bank of Thailand said they ran the experiments on a prototype developed by Partior. The prototype coordinated payment-versus-payment settlement and multilateral net FX transactions across their test environments.
Project Meridian FX APAC covered several currencies and time zones
The three central banks are working under Project Meridian FX APAC, announced last November. The banks said the project spanned multiple currencies, technologies, settlement infrastructures and time zones, with the Reserve Bank of Australia and Bangko Sentral ng Pilipinas taking part as observers.
According to the statement, Partior's system matched settlement instructions, coordinated the reservation of funds, monitored payment readiness and initiated settlement. The experiment also examined multilateral netting, which lets banks offset payments against one another to reduce the liquidity needed for settlement.
The policy report raises open questions
The accompanying policy report, however, identified questions around operational resilience, settlement finality, governance, liability and cross-border data sharing. It also warned that additional functions, including holding funds or calculating net positions, could change an operator's regulatory responsibilities.
Tom Mutton, the BOE's executive director of payments, innovation and fintech, said the project provided "practical evidence of how synchronized settlement could help reduce risk".
The BOE plans to launch a live synchronization interface in 2028, and findings from the project will inform further work on synchronized settlement.
Source: The Block
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