Yesterday (June 4), the Bank for International Settlements (BIS) announced Project Rialto, an initiative that aims to review how instant cross-border payments could be improved using a “modular foreign exchange (FX) component combined with settlement in wholesale central bank digital currencies (CBD).”
BIS said improving cross-border payments is a policy goal of the G2o.
Currently, FX is handled by correspondent banks, a costly and inefficient process. BIS notes that this exposes customers to liquidity, settlement, and credit risk.
BIS states:
“Decentralised solutions, CBDC and interlinked payment infrastructures are considered promising avenues to improve cross-border payments. How they interact has not yet been explored and could yield answers that advance cross-border payments globally.
Project Rialto is a collaboration of the BIS Innovation Hub Eurosystem and Singapore Centres in partnership with several central banks. It explores a new automatic FX settlement layer solution using wCBDC as a safe settlement asset that could be deployed for interlinked instant payment systems or digital asset systems.
Rialto in Venice is both a bridge connecting the two sides of the Grand Canal (symbolising the cross-border payment infrastructure), and a marketplace (symbolising the automatic FX settlement using wCBDC).”
Project Rialto is on of many ongoing projects that aim to review the benefits of digital currency and the potential for a CBDC whether wholesale only or offered to individual (retail) accounts.
