A distributed ledger technology-powered settlements system between the Bank of England and the Bank for International Settlements (BIS) Innovation Hub London Center have been tested. The Bank of England shall use the insights of the project in its real-time gross settlement (RTGS) system.
A report about the joint pilot project with Project Meridian the Bank of England was published On April 19, BIS . The 44-page document revealed that the houses in Wales and England have been successfully purchased by the banks through the synchronization network using distributed ledger technology (DLT).
A generic interface that could be ‘’relatively easily” extended to other asset classes such as foreign exchange are provided by the messages sent between the synchronization network and RTGS system using APIs. This is expected to provide the time and cost benefits as stated by the Report.
Project Meridian clearly aims to provide a settlement system for central bank digital currencies (CBDC). The report is explicit in citing the potential benefits for central banks:
“Synchronization can provide a catalyst for innovation in wholesale payments and support the emergence of new payments infrastructures that settle using central bank money.”
However, the “ Political and Operational considerations” part of the report concluded that there are several reservations about the possible use of the system.For instance, future network operators will be bound to think about the mechanics of identity verification. Also, the synchronization services would be limited by existing RTGS operating hours at a time when many jurisdictions are considering extensions to the operating hours of their national payment infrastructures.
Also implementing the system would raise several legal questions, such as the final point of irrevocability of the settlement, digital representation of asset ownership and the prevention of the erratic use of the clients’ funds by commercial banks before a date of transaction .
The completion of Project Icebreaker was reported by BIS In March 2023 about exploring international retail and remittance payments use cases for CBDCs with the central banks of Israel, Norway and Sweden. In October 2022, a CBDC pilot involving the central banks of Hong Kong was reported by the bank. Adding to the list, Thailand, China and the United Arab Emirates were “successful” after a month-long test facilitating $22 million in cross-border transactions.