The Bank of England, Monetary Authority of Singapore, and Bank of Thailand have finished testing a cross-border foreign exchange settlement system that links traditional payment infrastructure with distributed ledger technology. The trio conducted these experiments using a prototype developed by Partior, which coordinated payment-versus-payment settlement and multilateral net FX transactions across their respective test environments. This work falls under Project Meridian FX APAC, announced last November, and included the Reserve Bank of Australia and Bangko Sentral ng Pilipinas as observers. The project encompassed multiple currencies, technologies, settlement infrastructures, and time zones to ensure broad compatibility. I view this completion as a clear step forward because it provides "practical evidence" that synchronized settlement can reduce risk and improve efficiency in complex cross-border FX transactions.
Operational Mechanics and Regulatory Hurdles
Partio’s system matched settlement instructions, coordinated the reservation of funds, monitored payment readiness, and initiated settlement automatically. The experiment also examined multilateral netting, a process that allows banks to offset payments against one another to reduce the liquidity needed for settlement. However, the accompanying policy report identified serious questions around operational resilience, settlement finality, governance, liability, and cross-border data sharing. It warned that additional functions, including holding funds or calculating net positions, could change an operator’s regulatory responsibilities. These regulatory uncertainties remain a significant barrier to widespread adoption despite the technical success of the trial. Tom Mutton, the BOE’s executive director of payments, innovation and fintech, stated that the project provided "practical evidence of how synchronized settlement could help reduce risk and improve efficiency in cross-border FX transactions." The BOE plans to launch a live synchronization interface in 2028, and findings from Project Meridian FX APAC will inform further work on synchronized settlement. I recommend closely monitoring the 2028 rollout, as the current framework still lacks clarity on who bears liability when cross-border data sharing fails.
