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Project Meridian FX launched to improve FX transaction settlements

Monday 17 June 2024 14:42 CET | News

The Eurosystem, in collaboration with the London Centres of the BIS Innovation Hub and the Bank of England, has initiated Project Meridian FX.

 

This project builds upon the foundation laid by Project Meridian and focuses specifically on foreign exchange (FX) transactions. Central to Project Meridian FX is the concept of the 'synchronisation operator' (SO), originally developed in the preceding Meridian project. The primary objective is to assess the applicability of the SO across various asset types and technological platforms. Additionally, the project aims to explore potential enhancements to the SO's functionality, particularly those that could mitigate liquidity requirements for participants. 

A key area of exploration within the project involves investigating how operators of real-time gross settlement (RTGS) systems can facilitate interoperability with emerging payment technologies such as distributed ledger technology (DLT). The project is also looking to identify opportunities enabled by the synchronisation model, potentially offering more innovative and efficient settlement services for a broader spectrum of assets settled in central bank money.

 

The Eurosystem, in collaboration with the London Centres of the BIS Innovation Hub and the Bank of England, has initiated Project Meridian FX.

 

A focus on FX transactions 

By focusing on FX transactions, Project Meridian FX also aims to address longstanding challenges associated with FX trade settlement, such as cost, risk, and time inefficiencies in cross-border transactions. To achieve its goals, Project Meridian FX will leverage and expand upon the technological framework of the SO. This includes connecting RTGS systems operating in different jurisdictions and integrating an RTGS system with a DLT-based settlement platform. The project will test how the SO can facilitate interoperability between existing RTGS systems and emerging ledger technologies, particularly in orchestrating payment versus payment (PvP) FX transactions. 

Experiments under Project Meridian FX are scheduled to commence in late 2024. The project will collaborate with three other solutions that are a part of the Eurosystem's broader exploration into wholesale settlement: the Trigger Solution developed by Deutsche Bundesbank, the TIPS Hash-Link developed by Banca d'Italia, and the DL3S DLT Interoperability Solution developed by the Banque de France. 

Project Meridian FX aims to publish its findings in Spring 2025, summarising the insights resulted from its experimental phases.

Other important Eurosystem developments

In May 2024, the Eurosystem started a series of trials to assess the application of distributed ledger technology (DLT) for settling wholesale transactions in central bank money. Representatives from fintech company CONCRYT offered a perspective on this development and explained that they viewed the Eurosystem's trials as potentially significant for the evolution of blockchain and cryptocurrencies.

These trials were expected to provide insights into the benefits of DLT integration in wholesale financial transactions, possibly influencing future advancements in blockchain infrastructure. However, it’s worth noting that officials emphasised that the Eurosystem's exploratory work does not imply a commitment to implementing steady-state solutions or altering existing infrastructure and asserted that the success of DLT ultimately depends on industry players.


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Keywords: partnership, product launch, DLT, FX , transactions
Categories: Payments & Commerce
Companies: Bank of England, European Central Bank
Countries: Europe
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Payments & Commerce

Bank of England

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European Central Bank

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