The Bank of England, Singapore and Thailand have completed cross-border foreign exchange settlement trials as part of Project Meridian FX APAC. The tests demonstrated the ability to coordinate currency transactions through both traditional and blockchain-based payment infrastructure.
Settlement Process Tested Across Multiple Systems
The trials focused on payment-versus-payment settlement, which facilitates the settlement of both sides of a currency exchange and minimizes the risk of partial payment. Experiments covered real-time gross settlement networks and systems using distributed ledger technology.
Technology company Partitor created a prototype Synchronization Operator that coordinated transfers between the three settlement systems. The central banks also tested multilateral net settlement, where banks could postpone payment commitments while transferring payments. Results indicated this approach could reduce liquidity needs while maintaining coordinated settlement.
Resilience Testing and 2028 Launch Target
Researchers tested the system under failure scenarios including payment failures, insufficient funds and temporary system outages. The coordinated settlement process survived all tested failure conditions. However, the trials did not explore the effects of prolonged outages, varying hours of operation or actual commercial transactions.
Following the trials, the Bank of England reiterated plans to launch a live synchronization interface in 2028. Singapore and Thailand have not announced similar commitments under the project.
Broader Context on FX Settlement Risk
The Global Foreign Exchange Committee's latest survey, published in September and covering 49 financial institutions, found a foreign exchange settlement obligation of $14.4 trillion on average. Of that total, $1.2 trillion in settlements, or 8%, was conducted without measures to reduce foreign exchange settlement risk.
Project Meridian FX APAC examined legal and regulatory considerations for synchronized settlement, with the Reserve Bank of Australia and Bangko Sentral ng Pilipinas participating as observers. The project policy report identified that while technical coordination is important, legally binding settlements between different national payment systems require additional legal and regulatory frameworks.
