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The Bank of England, Monetary Authority of Singapore, and Bank of Thailand have completed a cross-border foreign exchange settlement trial connecting traditional payment infrastructure with distributed ledger technology. In a joint statement on Friday, the three central banks said the experiments used a prototype developed by Partior, which coordinated payment-versus-payment (PvP) settlement and multilateral net FX transactions across their test environments.
The work falls under Project Meridian FX APAC, announced last November. It spanned multiple currencies, technologies, settlement infrastructures, and time zones, with the Reserve Bank of Australia and Bangko Sentral ng Pilipinas participating as observers.
Why it matters
Partior's system matched settlement instructions, coordinated the reservation of funds, monitored payment readiness, and initiated settlement. The experiment also examined multilateral netting, which lets banks offset payments against one another to reduce the liquidity required for settlement.
Tom Mutton, the BOE's executive director of payments, innovation and fintech, said the project provided "practical evidence of how synchronized settlement could help reduce risk and improve efficiency in cross-border FX transactions."
Market impact
The accompanying policy report flagged unresolved questions around operational resilience, settlement finality, governance, liability, and cross-border data sharing, and warned that added functions such as holding funds or calculating net positions could change an operator's regulatory responsibilities. The BOE plans to launch a live synchronization interface in 2028, and the trial's findings will inform further work on synchronized settlement.
Frequently asked questions
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What is Project Meridian FX APAC?
It is a joint central banking project announced last November under which the Bank of England, Monetary Authority of Singapore, and Bank of Thailand tested cross-border FX settlement connecting traditional payment infrastructure with distributed ledger technology, with Australia and the Philippines observing.
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What role did Partior play in the trial?
Partior developed the prototype used in the experiments. Its system matched settlement instructions, coordinated the reservation of funds, monitored payment readiness, and initiated payment-versus-payment and multilateral net FX settlement across the central banks' test environments.
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What is payment-versus-payment (PvP) settlement?
PvP settlement ensures both legs of a foreign exchange transaction settle simultaneously, so neither counterparty is left exposed if the other side fails. The trial also tested multilateral netting, which lets banks offset payments to reduce the liquidity needed for settlement.
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What open questions did the trial leave unresolved?
The accompanying policy report identified questions around operational resilience, settlement finality, governance, liability, and cross-border data sharing. It also warned that functions like holding funds or calculating net positions could change an operator's regulatory responsibilities.
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When will tokenized settlement go live at the Bank of England?
The Bank of England plans to launch a live synchronization interface in 2028, and findings from Project Meridian FX APAC will inform further work on synchronized settlement.
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