Exploring the future of cross-border payments with distributed ledger technology
Highlights:
- EU central banks, in collaboration with the BIS, have successfully tested synchronised settlement for FX transactions using distributed ledger technology (DLT).
- The project, named Meridian FX, demonstrated interoperability between traditional RTGS systems and experimental DLT platforms.
- This initiative aims to enhance efficiency, reduce risks, and provide insights for future financial market innovations.
Story Summary: EU central banks, in partnership with the Bank for International Settlements (BIS), have embarked on an ambitious project to revolutionize foreign exchange (FX) transactions. The initiative, known as Meridian FX, leverages distributed ledger technology (DLT) to achieve synchronised settlement, ensuring that the transfer of one currency occurs only if the corresponding transfer of another currency is completed. By connecting traditional real-time gross settlement (RTGS) systems with experimental DLT platforms, the project has successfully demonstrated interoperability and payment-versus-payment (PvP) settlements.
This groundbreaking approach not only reduces risks and costs associated with cross-border transactions but also paves the way for innovative financial market solutions. Insights from this project are expected to shape the future of global payment systems.
