The Bank of England, the Monetary Authority of Singapore, and the Bank of Thailand have come together to investigate the technical and policy implications of settling tokenized foreign exchange (FX) transactions using synchronized settlement mechanisms.
The initiative builds on insights from the Bank for International Settlements-led Project Meridian, which demonstrated how wholesale payment infrastructures, such as Real-Time Gross Settlement (RTGS) systems, can interoperate for FX transactions through new technologies like distributed ledgers.
For the current trials, simulated versions of the participating central banks’ RTGS systems and distributed ledger technology-based settlement environments will be used to test interoperability across complex use cases involving various settlement infrastructures.
This collaborative effort specifically aims to explore how synchronization can facilitate Payment versus Payment tokenized FX settlements across jurisdictions with differing infrastructures, time zones, and regulatory frameworks.
Tom Mutton, director of fintech at the Bank of England, stated, “This project investigates how synchronization solutions may support an open and effective global financial system by providing an innovative FX settlement channel. This, along with our RT2 Synchronisation Lab, is part of our broader strategy to foster innovation and enhance functionality in money and payments.”