The Bank of England, Monetary Authority of Singapore, and Bank of Thailand said Friday they have completed trial of synchronized foreign exchange (FX) settlement across different currencies and systems.
The central banks said in a statement that they have published the findings from their collaboration on synchronized cross-border FX settlement under Project Meridian FX APAC.
The project marks significant progress in exploring the practical application of synchronization to FX settlement, demonstrating how it could be one approach to supporting interoperability across wholesale settlement environments built on different technologies and operating models.
Building on earlier work, Project Meridian FX APAC tested payment-versus-payment FX settlement and multilateral net FX settlement across three central banks’ test environments, spanning both Real-Time Gross Settlement and Distributed Ledger Technology based settlement systems.
The project encompassed a wider range of currencies, technologies, infrastructures and time zones. Partior, the project’s delivery partner, developed, integrated and tested the Synchronization Operator (SO) prototype for the trial.
The trial demonstrated that synchronized settlement can be achieved across central bank systems with different technologies and capabilities, while identifying the functional requirements and integration trade-offs involved. They also demonstrated how multilateral net FX settlement through synchronization can reduce settlement risk while delivering liquidity efficiencies.
The project also examined the legal, regulatory and oversight considerations for applying synchronized FX settlement in practice. The analysis was informed by perspectives from the Reserve Bank of Australia and Bangko Sentral ng Pilipinas, who participated as observer central banks.
The project’s findings and insights are published across three complementary reports: Executive Summary and Introduction, Technical Report, and Policy Report.
Together, they set out the experimental results, key technical findings and policy considerations.
These results provide insights to inform further exploration of synchronization as a means for enabling safer and more efficient FX settlement across diverse wholesale settlement systems.
Future work could involve extending the existing approach to additional jurisdictions and industry participants, a wider range of currencies and transaction scenarios and further consider the technical, legal, operational and governance arrangements needed in practice.
“Innovation has the greatest impact when it addresses real world challenges. Project Meridian FX APAC provides practical evidence of how synchronized settlement could help reduce risk and improve efficiency in cross-border FX transactions,
“The results provide a strong foundation for further collaboration as we explore how this approach could be developed towards real-world use,” said Tom Mutton, Executive Director of Payments, Innovation and Fintech at the Bank of England.
Kenneth Gay, Chief FinTech Officer at the Monetary Authority of Singapore, said cross-border settlement increasingly takes place across systems built on different technologies and operating models.
“Project Meridian FX APAC has shown how synchronization could help enable PvP settlement across these diverse environments, reducing settlement risk
while supporting greater interoperability,” he added.
Pucktada Treeratpituk, Director of Payment Systems and Financial Technology Policy Department at the Bank of Thailand, said project Meridian FX APAC successfully demonstrated that synchronisation can work across diverse wholesale settlement systems, making cross-border FX safer and more efficient while preserving trust in central bank money.
“The insights on technical integration, operating models and regulatory considerations established a practical foundation for modernising wholesale settlement infrastructure,” he added.
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