Three central banks tested a new way to settle foreign exchange
The Bank of England, the Monetary Authority of Singapore and the Bank of Thailand showed that foreign exchange can settle simultaneously across different systems. In the same week, four Southeast Asian central banks agreed to use their own currencies more.
- The Bank of England, the Monetary Authority of Singapore and the Bank of Thailand completed a trial of Project Meridian FX APAC, testing payment-versus-payment settlement across the three central banks' test environments. m:…4714
- More than $1.4 trillion, or 10%, of average daily foreign exchange settlement in April 2025 remained fully exposed to settlement risk, according to the 2025 BIS Triennial Survey. m:…4714 m:…9293
- The Bank of England plans to launch a live synchronisation interface in 2028. m:…9293
- Bank Indonesia, Bank Negara Malaysia, the Bank of Thailand and Bangko Sentral ng Pilipinas signed a memorandum of understanding on 13 November 2026 to strengthen cooperation under the Local Currency Transaction Framework. m:…5267
The problem: $1.4 trillion settles unprotected every day
Foreign exchange settlement still carries a risk that the plumbing of global finance has never fully removed. According to the 2025 BIS Triennial Survey, more than $1.4 trillion of average daily foreign exchange settlement remained exposed to settlement risk in April 2025 — about 10% of the total. That is the amount that changes hands each day with one side of a trade settling before the other, leaving the first payer exposed if the counterparty fails in between. m:…4714 m:…9293
This week three central banks published the results of a trial designed to close that gap. The Bank of England, the Monetary Authority of Singapore and the Bank of Thailand completed a trial of Project Meridian FX APAC, testing payment-versus-payment settlement across the three central banks' test environments. The trial spanned both real-time gross settlement systems and distributed ledger technology-based settlement systems, showing that synchronised settlement can be achieved across central bank systems with different technologies and capabilities. m:…4714
How synchronisation works
The mechanism is a coordination layer, not a new currency or a shared ledger. A Synchronisation Operator prototype, developed, integrated and tested by Partior, coordinates movements of central bank money so that settlement in one system is made conditional on settlement occurring in another. The Bank of England describes synchronisation as coordinating movements of central bank money to support interoperability across wholesale settlement environments. m:…4714 m:…9293 m:…2401
The trial also tested multilateral net foreign exchange settlement, which supports banks in using their liquidity more efficiently by netting payments against each other, rather than settling each trade gross. The project demonstrated that synchronisation could support atomic payment-versus-payment settlement across different wholesale settlement systems, and that multilateral net settlement was technically feasible across the three experimental environments. m:…9293 m:…2401
The experiment was deliberately limited. It tested exception scenarios including insufficient funds, invalid account identifiers and temporary infrastructure outages, but it did not reproduce the full foreign exchange trade lifecycle, live participants or production operating conditions. The policy work also drew a line the technology cannot cross on its own: the analysis distinguishes technical atomicity from legal settlement finality. The Bank of England is committed to launching a synchronisation service in 2028, and the Bank of Australia and Bangko Sentral ng Pilipinas participated as observer central banks. m:…2401 m:…9293
The parallel track: settle in local currencies
While the three central banks worked on synchronising existing systems, four Southeast Asian central banks took a different route to the same problem. Bank Indonesia, Bank Negara Malaysia, the Bank of Thailand and Bangko Sentral ng Pilipinas signed a memorandum of understanding on 13 November 2026 to strengthen cooperation under the Local Currency Transaction Framework. The agreement aims to enhance efficiency in cross-border settlements, reduce costs associated with multiple currency conversions, and give businesses and market participants greater flexibility in managing foreign exchange risks. m:…5267
The new agreement supersedes the previous bilateral memorandums on the framework for cooperation concluded among Bank Indonesia, Bank Negara Malaysia and the Bank of Thailand in August 2023, replacing a patchwork of bilateral deals with a unified regional approach. Bank Indonesia separately signed a memorandum of understanding with Bangko Sentral ng Pilipinas to deepen bilateral cooperation, signed on the Philippine side by Governor Eli M. Remolona, Jr. m:…5267 m:…1955
The two tracks answer different questions. Synchronisation asks how to make settlement across existing systems safer without changing the currencies involved. The local currency framework asks whether some of those trades need to pass through a major international currency at all. Both point the same way: the central banks that run the settlement systems are now redesigning them, rather than leaving the risk where it has sat for decades. m:…4714 m:…1954
What is still unresolved
- Whether the Bank of England's planned 2028 live synchronisation interface attracts other central banks and commercial participants.
- Whether the local currency framework expands beyond the four signatories to cover more trade and investment flows.
- How legal settlement finality is handled once synchronisation moves from test environments to live systems.
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