BIS and Bank of England team up to evaluate synchronised settlement in FX transactions
The Bank for International Settlements (BIS) and the Bank of England have partnered to launch Project Meridian FX, an investigation examining synchronised settlement in foreign exchange (FX) transactions.
BIS and Bank of England unite to launch Project Meridian FX
Building on the findings of Project Meridian, which introduced the concept of the synchronisation operator (SO) through transaction testing, Meridian FX will assess the “usability” of the SO across various asset types and technologies.
In addition, the initiative will also investigate additional integrateable features for the SO, with BIS highlighting those that “could help reduce the liquidity needs of participants”.
Scheduled to commence towards the end of 2024, the project will see Meridian FX’s SO connect with three solutions under the Eurosystem’s broader exploratory work on wholesale settlement: the DL3S DLT Interoperability Solution by the Banque de France; the Trigger Solution by Deutsche Bundesbank; and the TIPS Hash-Link by Banca d’Italia.
By concentrating on FX transactions, the project participants believe Meridian FX has the potential to address long-standing challenges in settling FX trades, including reducing the “costs, risks, and time” associated with cross-border transactions.
Moreover, BIS states that the initiative, which aims to report its findings in the spring of 2025, will showcase the “opportunities that the synchronisation model could unlock”.
In particular, the project will explore how operators of real-time gross settlement (RTGS) systems can achieve interoperability with emerging payment technologies, such as distributed ledger technology.
