The project is called Project Meridian, and its findings will be used by the Bank of England to refine its existing Real-Time Gross Settlement system (RTGS).
The Bank for International Settlements (BIS) and the Bank of England announced the results of Project Meridian, an innovative institution-to-institution settlement system based on distributed ledger technology (DLT). The BoE plans to use the results of the project to improve the existing RTGS architecture.
Project Meridian used synchronization between the RTGS system, which has a centralized ledger, and DLT-based networks. Processing was done using APIs with internal security certificates and a single user interface. This system reduces the time, cost, and risk of transactions.
The report says that Project Meridian has been successfully used to buy property in Wales and England. However, the document notes that one of the purposes of the study was to investigate the infrastructural capacity of the settlement system for wholesale CBDCs.
Among the problematic points, the researchers highlight the limited hours of operation of the RTGS system and the need for identity verification protocols. In addition, there are several legal issues, including:
- digital representation of asset ownership;
- control over the use of customer funds by commercial banks;
- technical specifics of DLT-based settlements, which are irrevocable.
Over the past few years, the Bank for International Settlements has been actively exploring opportunities for using cross-border CBDCs. For instance, Project Icebreaker was completed at the beginning of March, and a hub-and-spoke solution was examined, enabling interconnecting of different countries’ CBDC systems.
