Project Meridian FX: Joint Project by the Eurosystem and London Centres, and the Bank of England, to Test Synchronised Settlement in FX

The Eurosystem and London Centres of the BIS Innovation Hub, together with the Bank of England, have launched Project Meridian FX, to build on the findings of Project Meridian by focusing on foreign exchange (FX) transactions.

The starting point is the concept of the “synchronisation operator” (SO) developed in the first Meridian project. Meridian FX will test the usability of the SO for different types of assets and technologies. It will also explore additional features that could form part of an SO’s offering, such as those that could help reduce the liquidity needs of participants.

The project will provide insights on how operators of real-time gross settlement (RTGS) systems could enable interoperability with new payments technologies, such as distributed ledger technology (DLT). It will highlight the opportunities that the synchronisation model could unlock, including more innovative and efficient settlement services for a wider range of assets that are settled in central bank money.

By focusing on FX transactions, the project could also offer potential solutions to long-standing issues in settling FX trades, such as the costs, risks and time involved in cross-border transactions.

To achieve its objectives, Meridian FX will build on the technology behind the SO, allowing it to connect two RTGS systems based in different jurisdictions. Meridian FX will also connect an RTGS system with a DLT-based settlement platform, testing how the SO could support interoperability between existing and new ledger technologies. The aim in both scenarios will be for the SO to successfully orchestrate the settlement of a payment versus payment (PvP) FX transaction.

The experiments will take place towards the end of 2024. They will involve connecting Meridian FX’s SO to the three solutions being explored as part of the Eurosystem’s broader exploratory work on wholesale settlement:

• the Trigger Solution developed by Deutsche Bundesbank
• the TIPS Hash-Link developed by Banca d’Italia
• the DL3S DLT Interoperability Solution developed by the Banque de France

The project aims to report on its findings in Spring 2025.