The Bank of England, Monetary Authority of Singapore and Bank of Thailand said on Friday that synchronised FX settlement worked across three test systems, but legal and oversight questions remain.
The Bank of England said the findings will inform its development of a live synchronisation service, consistent with its commitment to launch synchronisation in 2028. Participation does not imply an equivalent commitment from MAS or the Bank of Thailand.
On the policy side, the central banks said existing frameworks provide “useful building blocks” but no ready-made model for synchronisation, and that the right treatment depends on what the operator actually does.
Synchronisation links settlement in separate systems so that payments either complete together or do not proceed.
A prototype synchronisation operator (SO) used it to settle payment-versus-payment (PvP) transactions, in which both currency legs of an FX trade settle together or not at all, across three central bank test environments with materially different architectures.
Interoperability did not require the systems to adopt identical capabilities or a common technical architecture. Where a system lacked a capability, the operator used system-specific adapters or alternative arrangements to reach the same outcome.
Multilateral net FX PvP, which settles offsetting transactions together to cut liquidity needs, was also demonstrated across the three environments. The central banks said this could improve liquidity efficiency while preserving all-or-nothing settlement.
The central banks used a non-custodial operator as the baseline for their analysis. It matches instructions, earmarks (sets aside) funds, monitors readiness and instructs settlement without holding money. Authorised third-party access, funds reservation and reliable status information make that possible, they said.
Such a model may avoid some risks, such as direct credit and liquidity exposures. The central banks added that it “does not eliminate risk from the end-to-end arrangement”, because the operator creates a co-ordination dependency across systems, participants and jurisdictions.
The test itself departed from that baseline. In the MAS environment the operator used a dedicated escrow account to replicate funds reservation, and it calculated net positions in the multilateral runs. The central banks said neither is an inherent feature of synchronisation.
They said holding funds could raise custodial, credit, liquidity, safeguarding and insolvency questions. Calculating net positions could bring the operator closer to functions associated with clearing.
They also separated technical atomicity from legal settlement finality.
Once the first settlement instruction is executed, the transaction can no longer be unwound by cancelling earmarks, but each domestic system may define its own final settlement event, and the technical workflow cannot settle that legal question by itself.
The experiment did not reproduce the full FX trade lifecycle, live participants or production conditions. It assumed overlapping system availability, so non-overlapping operating hours, time-zone differences and earmark expiry were outside the tests, as were prolonged outages.
The policy work drew on existing approaches as reference points.
These were the Reserve Bank of Australia’s Batch Administrator framework for access, co-operative oversight of Swift led by the National Bank of Belgium, Continuous Linked Settlement for finality, and the Principles for Financial Market Infrastructures for governance.
The Reserve Bank of Australia (RBA) framework requires assurance, before access is granted, that an operator’s legal and contractual framework can be enforced in its home jurisdiction.
The central banks said none of the frameworks covers the full combination of cross-border settlement co-ordination and operational dependency.
They said access, assurance and regulatory perimeter questions may sit mainly with individual jurisdictions. Settlement finality, accountability and co-operation between authorities arise from the cross-border nature of the service.
The central banks also said internationally developed principles could, if considered useful, give a more consistent basis for assessing operators, while avoiding the assumption of a single service design.
The policy work was developed by the three central banks, with Bangko Sentral ng Pilipinas and the RBA as observers and Partior as technical partner.
It builds on earlier Project Meridian and Meridian FX work, and the policy conclusions do not recommend a common implementation or policy approach, or presume a commitment to live deployment.
