The central banks of England, Singapore and Thailand say they’ve found a new way to streamline foreign exchange (FX) transactions.
The Bank of England, Monetary Authority of Singapore and Bank of Thailand published the results of their efforts Friday (Nov. 13), part of what’s known as Project Meridian FX APAC.
“The project showed that synchronization — a service that coordinates movements of central bank money — could be one approach to supporting interoperability across wholesale settlement environments built on different technologies and operating models,” the Bank of England (BoE) said in a news release.
“This marks significant progress in making cross-border FX transactions safer and more efficient, and supporting interoperability as different forms of money evolve in different ways.”
The BoE added that — in light of its plans to introduce a live synchronization interface in 2028 — the results offer “valuable insight into how the approach could be developed into a live service.”
Based on previous work, Project Meridian tested payment-versus-payment FX settlement and multilateral net FX across the three central banks’ test environments. These tests involved both real-time gross settlement and distributed ledger technology-based settlement systems, encompassing a broad range of currencies, technologies, infrastructures and time zones, the central banks said.
“The trial demonstrated that synchronized settlement can be achieved across central bank systems with different technologies and capabilities, while identifying the requirements and trade-offs involved,” the release added.
“They also demonstrated how multilateral net FX settlement can support banks in using their liquidity more efficiently by netting payments against each other.”
In related news, PYMNTS wrote last month about efforts by financial providers to combine accounts, currency management and spending services. This is in response to small businesses in the U.S. that are purchasing overseas and seeking faster payments, lower fees and better exchange rates.
Research by PYMNTS Intelligence and Mastercard, from the report “The Cross-Border Opportunity: What Global Sourcing by US SMBs Means for Payment Providers,” found in May that 57% of surveyed small to medium-sized businesses (SMBs) sourced production inputs from overseas last year.
International sourcing extended to 42% of businesses with yearly revenue below $150,000, compared with 73% of companies who generate between $1 million to $10 million.
“The findings placed cross-border payments within routine purchasing for businesses of different sizes,” PYMNTS added.
