A distributed ledger technology (DLT)-powered settlements system has been successfully tested by the Bank of England and the Bank for International Settlements (BIS) Innovation Hub London Center. This system is expected to provide insights to the Bank of England’s real-time gross settlement (RTGS) system.
The joint pilot project named Project Meridian was recently documented in a report published by BIS on April 19. The report stated that the synchronization of DLT between the banks for purchasing houses in Wales and England was successful.
By transmitting messages between the synchronization network and the RTGS system using APIs, a generic interface could be created and extended to other asset classes, such as foreign exchange. This extension could lead to reduced costs, time, and risks associated with transactions.
The Bank of England and BIS have been exploring DLT’s potential for financial settlements and transaction processing for several years. Multiple projects, including a cross-border payments project named Project Stella, have been worked on and completed by them in 2019.
The successful testing of this DLT settlements system is a crucial milestone for the Bank of England and BIS. With DLT showing great promise for settlements and transaction processing, the potential of DLT being used in other asset classes may become a reality soon.