BISIH: Enhancing Payments Through Innovations to Central Banks’ Payment SystemsPosted on May 30, 2023 by Chris Hackworth, Advisor, Bank for International Settlements Innovation Hub London Centre
Technology is revolutionising the provision of financial services. Central banks and other public authorities are identifying the opportunities this opens up, and one response has been to set up innovation functions.
The Bank for International Settlements (BIS) Innovation Hub is uniquely placed to consider this from a global perspective by experimenting with technology that can benefit central banks across the world. It has a mandate to develop technological solutions that support central banks in meeting their public good remits. And it executes this through close collaboration with private sector partners who have deep expertise in innovative financial technology.
Significant experimentation has been conducted by the Innovation Hub around new types of infrastructures, such as central bank digital currencies (CBDCs). These have huge potential to improve cross-border payments. Equally as important have been the Innovation Hub’s projects innovating existing financial market infrastructures. Central banks periodically replace or review their financial plumbing, like real-time gross settlement (RTGS) systems. These infrastructures will remain part of the financial system for the foreseeable future, and will need to integrate with new components and technologies.
Next-Generation FMI Project at the Innovation Hub
Project Meridian—a collaboration between the BIS Innovation Hub London Centre and the Bank of England—sits within a group of projects that seek to explore how to enhance traditional infrastructures as they are refreshed or replaced to meet the evolving demands of financial services consumers, and to remain performant.
Project Meridian explores how to automatically execute complex transactions by digitally interlinking an RTGS system with other asset ledgers. The change in ownership of funds is made conditional on the change in ownership of an asset or other funds, and vice versa, by introducing a new entity—a synchronisation operator—at the center of the transaction. Innovations to RTGS systems explored in the project could open the opportunity for ...
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