SKN | UK, Singapore and Thailand Test Blockchain-Linked FX Settlement as Stablecoins Challenge Traditional Payment Rails

Key Points:

• The Bank of England, Monetary Authority of Singapore and Bank of Thailand completed Project Meridian FX APAC, demonstrating coordinated foreign exchange settlement across conventional and distributed-ledger systems.
• The trial tested payment-versus-payment (PvP) settlement and multilateral netting, two mechanisms designed to reduce settlement risk and improve liquidity efficiency.
• The Bank of England plans to introduce a live synchronization interface in 2028, although commercial deployment still requires legal, regulatory and operational development.

Central banks in the United Kingdom, Singapore and Thailand have demonstrated how cross-border foreign exchange transactions could be coordinated across traditional financial infrastructure and blockchain-based settlement systems. The findings from Project Meridian FX APAC arrive as stablecoins gain attention as alternative payment instruments, intensifying the discussion around the modernization of international financial infrastructure. For institutional investors, the development highlights a potential convergence between conventional banking systems and distributed ledger technology.

Synchronizing Traditional and Blockchain-Based Settlement

The project brought together the Bank of England (BoE), the Monetary Authority of Singapore (MAS) and the Bank of Thailand (BOT) to examine whether a common coordination mechanism could connect wholesale settlement systems built on different technologies. The experiment covered three central bank test environments, incorporating both Real-Time Gross Settlement (RTGS) infrastructure and distributed-ledger technology-based systems.

Rather than requiring participating institutions to adopt identical infrastructure, the model uses synchronization to coordinate transfers across separate systems. Its central component is a Synchronisation Operator prototype developed with technical partner Partior. The operator coordinates linked payment instructions so that transactions can proceed together under agreed conditions.

This approach addresses a structural challenge in international finance: different jurisdictions operate payment systems with distinct technical architectures, settlement processes and operating arrangements. Improving interoperability could reduce friction without requiring every central bank to replace its existing infrastructure.

Reducing Settlement Risk and Liquidity Requirements

One major component of the experiment was payment-versus-payment settlement. Under this mechanism, one currency transfer occurs if and only if the corresponding payment in the other currency also takes place. This reduces the risk that one counterparty delivers funds but fails to receive the currency owed.

The issue remains significant across global foreign exchange markets. The Bank for International Settlements reported that more than $1.4 trillion, equivalent to approximately 10% of average daily FX settlement in April 2025, remained fully exposed to settlement risk. The figure illustrates why improvements to cross-border settlement remain a priority for financial authorities.

Project Meridian FX APAC also tested multilateral netting, which allows banks to offset payment obligations against one another rather than settling every transaction independently. This could reduce the amount of liquidity institutions need to maintain for cross-border transactions. However, the published findings did not establish a quantified liquidity saving or commercial performance benchmark.

Stablecoins Raise the Competitive Stakes

The timing is significant as stablecoins increasingly offer businesses and financial institutions an alternative approach to cross-border transfers, with blockchain-based infrastructure supporting continuous transaction availability. Nevertheless, Project Meridian FX APAC did not test stablecoin settlement. Its focus was on coordinating transfers across wholesale systems while preserving settlement in central bank money.

The distinction matters. Central banks are exploring how blockchain infrastructure can improve existing financial arrangements without necessarily replacing sovereign monetary systems with privately issued digital currencies. For crypto infrastructure providers, the findings indicate that institutional adoption may increasingly depend on interoperability, governance and integration with regulated financial networks.

The next milestone will be implementation. The Bank of England has outlined plans for a live synchronization interface in 2028, while further work is needed on legal arrangements, regulatory oversight and broader market participation. Whether this model becomes commercially viable will depend on how effectively those issues are addressed across jurisdictions. For institutional investors, the experiment offers a meaningful indication of where traditional finance and blockchain infrastructure may increasingly intersect.