BIS Project Meridien Stage Two to Focus on FX
Posted by Colin Lambert. Last updated: June 17, 2024
Following on from the findings of Project Meridien, which used real-estate transfers as its basis, the London and Eurosystem BIS Innovation Hubs are partnering with the Bank of England for stage two of the project, focusing on FX transactions.
The original project used a “synchronisation operator” (SO) and this is the starting point to phase two, entitled Meridien FX. The project will later test the usability of the SO for different types of assets and technologies, as well as 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 BIS says Meridien FX 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, it adds, 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. It 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 and connect the 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, and the the DL3S DLT Interoperability Solution developed by the Banque de France
The BIS says the project aims to report on its findings in Spring 2025.
