The Bank for International Settlements (BIS) and its central bank partners have successfully demonstrated the interoperability of wholesale payment infrastructures, such as Real-Time Gross Settlement (RTGS) systems, for foreign exchange (FX) transactions using advanced technologies like distributed ledgers.
This collaborative project involved the BIS, Bank of England, Bank of France, Bank of Italy, Deutsche Bundesbank, and the European Central Bank. It focused on synchronizing the settlement of FX transactions through distributed ledger technology, ensuring that one leg of a transaction—like purchasing a currency—only occurs if the corresponding leg—such as selling another currency—also takes place.
Central to Project Meridian FX is the synchronisation operator, a technology-neutral interface that facilitates the simultaneous exchange of assets across various payment systems. This initiative connected a synthetic version of the UK RTGS system with three experimental Eurosystem DLT platforms: DL3S (developed by the Bank of France), TIPS Hash-Link (by the Bank of Italy), and the Trigger Solution (by Deutsche Bundesbank).
The synchronisation operator effectively managed payment-versus-payment (PvP) FX settlements in each case. Project Meridian FX also investigated additional features, such as liquidity-saving mechanisms and user-defined transaction rules, including approval limits. The results indicate that synchronisation can be agnostic to both the assets involved and the underlying ledger technologies, suggesting its potential application in other markets.
Insights gained from this project are expected to influence the work programs of the participating central banks.