The Bank for International Settlements (BIS) is spearheading transformative initiatives in global finance, leveraging various technologies to enhance efficiency and interoperability in financial systems.
Two recent projects, Project Meridian FX and Project Promissa, exemplify this commitment, addressing critical challenges in foreign exchange (FX) transactions and promissory note management.
These initiatives, developed in collaboration with central banks and international organizations, seem to signal a step toward modernizing financial infrastructures.
Project Meridian FX, a collaborative effort involving the BIS Innovation Hub, the Bank of England, Bank of France, Bank of Italy, Deutsche Bundesbank, and the European Central Bank, has demonstrated the potential for interoperability among wholesale payment infrastructures, such as real-time gross settlement (RTGS) systems, for FX transactions.
The project explored how new technologies can synchronize FX transactions across jurisdictions and diverse infrastructures, enabling seamless cross-border settlements.
RTGS systems are critical for high-value, time-sensitive transactions, but their siloed nature often complicates cross-border FX operations, leading to delays and increased costs.
Project Meridian FX’s proof-of-concept (PoC) showcased how innovative technologies can bridge these gaps, ensuring faster, more secure, and cost-effective settlements.
By enabling interoperability, the project reduces reliance on manual processes and mitigates risks associated with cross-jurisdictional transactions.
This breakthrough could reshape global FX markets, fostering greater financial stability and efficiency.
The implications of Meridian FX extend beyond technical feasibility.
For central banks and financial institutions, interoperable systems could lower operational costs and enhance liquidity management.
As global trade and digital finance grow, such innovations are vital for maintaining robust, scalable financial systems.
The project’s success underscores BIS’s role in fostering international cooperation to address systemic challenges in monetary and financial stability
In parallel, Project Promissa, a collaboration between the BIS Innovation Hub, the Swiss National Bank, and the World Bank, with the International Monetary Fund as an observer, has tackled inefficiencies in managing promissory notes.
The project developed a PoC platform that uses distributed ledger technology (DLT) to tokenize paper-based promissory notes, which are financial instruments used to fund multilateral development banks (MDBs).
Traditional promissory note management is plagued by manual, paper-based processes that are time-consuming, error-prone, and costly.
Project Promissa’s DLT-based platform digitizes these notes, automating processes and enhancing transparency.
The PoC demonstrated that tokenization is technically viable and could yield significant cost savings for MDBs, central banks, and Ministries of Finance.
By replacing outdated systems with a secure, decentralized ledger, the platform streamlines operations and improves accountability.
The potential impact of Project Promissa is profound.
MDBs, which rely on promissory notes to finance development projects, could operate more efficiently, channeling resources to critical global challenges like poverty reduction and climate change.
The project also sets a precedent for applying DLT to other financial instruments, paving the way for broader adoption of blockchain-based solutions in public finance.
Together, Project Meridian FX and Project Promissa highlight BIS’s role in driving financial innovation through collaboration and technology.
By addressing inefficiencies in FX transactions and promissory note management, these initiatives aim to enhance the global financial systems’ resilience and efficiency.
As BIS continues to explore emerging technologies, its work may help shape or influence the future of central banking and international finance, fostering a more interconnected and sustainable digital economy.