Bank for International Settlements Innovation Hub and European central banks demonstrate interoperable RTGS linkages for synchronised FX settlement

The Bank for International Settlements Innovation Hub, working with the Bank of England, Bank of France, Bank of Italy, Deutsche Bundesbank and European Central Bank, published findings from Project Meridian FX showing that wholesale payment infrastructures such as real-time gross settlement (RTGS) systems can interoperate for foreign exchange (FX) transactions using new technologies. The work demonstrated that FX transactions could be settled across jurisdictions and different types of infrastructures through synchronised settlement. The prototype used distributed ledger technology to synchronise the two legs of an FX trade so that one transfer occurs only if the other transfer occurs, supporting payment-versus-payment settlement and reducing FX settlement risk. It connected a synthetic version of the UK RTGS system to three experimental Eurosystem interoperability solutions: DL3S (Bank of France), TIPS Hash-Link (Bank of Italy) and the Trigger Solution (Deutsche Bundesbank). The BIS also noted that, combined with earlier BIS and Bank of England work, the approach can be agnostic to asset type and ledger technology, suggesting potential applicability beyond FX. Insights from Meridian FX are intended to inform the participating central banks’ future work programmes and align with actions in the Group of 20 cross-border payments roadmap, including establishing practical links between national wholesale payment infrastructures and mitigating liquidity and credit risk challenges in FX markets.