The Bank for International Settlements (BIS) has launched Project Rialto, a foreign exchange (FX) module designed to facilitate instant FX settlement for cross-border payments.
According to BIS, the infrastructure leverages wholesale central bank digital currencies (wholesale CBDC) as the settlement asset with a promise to streamline and enhance the efficiency of international financial transactions.
Project Rialto is part of the BIS Innovation in Singapore and the Eurosystem and seeks to improve the efficiency and security of international transactions. The project aims to reduce the complexity and costs associated with traditional cross-border transactions.
The article “Settlement Around the World: Settlement Rates in the Largest Economies” analyzes settlement rates across 23 of the 25 largest economies. It finds that settlement rates vary greatly, from below 15% in some countries to over two-thirds in others.
Additionally, with the G20’s push to make cross-border payments cheaper and faster, focusing on FX is crucial due to its high costs.
The Financial Stability Board reports that FX transactions make up 60% of global person-to-person (P2P) payment costs and up to 97% of person-to-business (P2B) payment costs. Reducing these costs is key to making international payments more affordable and efficient.
Apart from Project Rialto which seeks to explore CBDCs, it has initiated other projects such as Project Mariana, Project Agora, and Project Guardian.
Project Mariana is an initiative by the Bank for International Settlements (BIS) that successfully tested cross-border trading and settlement of wCBDCs between financial institutions.
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The project was a joint effort by three BIS Innovation Hub centers (Swiss, Eurosystem, and Singapore) and central banks including the Banque de France, the Monetary Authority of Singapore (MAS), and the Swiss National Bank.
Project Agora is a collaboration by the Bank for International Settlements (BIS) to improve cross-border payments using asset tokenization.
It involves seven central banks, commercial banks, and private financial institutions to create a unified ledger that combines tokenized commercial bank deposits and wholesale central bank money.
Project Guardian is a collaborative initiative by the Bank for International Settlements (BIS) aimed at enhancing the liquidity and efficiency of financial markets through asset tokenization.
The importance of new financial infrastructure has become a key concern for today’s financial institutions.
Innovative systems like digital payment channels, blockchain technology, open banking, and decentralized finance (DeFi) are transforming the financial landscape, by offering greater financial inclusion, transparency, and trust in transactions.
