BIS Concludes Project Meridian
Posted by Colin Lambert. Last updated: April 21, 2023
The Bank for International Settlements has announced the conclusion of Project Meridian, which investigated how recent advances in financial technology could deliver innovations in the real-time gross settlement (RTGS) systems operated by central banks.
Synchronisation is achieved by the introduction of a new entity called a synchronisation operator, BIS explains, adding this operator would interlink RTGS systems with other financial market infrastructures (FMIs) and ledgers, automatically orchestrating the exchange in ownership of funds and assets. The operator does not hold the funds or assets on its own balance sheet.
The Meridian prototype developed a synchronisation network using distributed ledger technology (DLT). The prototype demonstrated how a DLT network could connect to the conventional centralised systems used by participants in a transaction – including the RTGS operator – using open-standard APIs.
The API messages exchanged between financial institutions use existing global standards for payment messages, namely ISO 20022. The BIS says a relatively simple generic interface gives a synchronisation operator a high degree of control over the movement of central bank money and an asset in a transaction, thus enabling the synchronised settlement of funds and an asset.
It adds that the prototype highlighted the scope for additional efficiencies that enable innovation beyond the direct benefits of synchronised settlement. The prototype digitisesd the change in asset ownership by introducing a digital deed, which was time-stamped at the point of settlement finality. “This could act as a catalyst for industry participants to streamline the transaction by supporting further innovation,” BIS states.