Global: Central Banks to Pilot FX Settlement Using wCBDC

The Bank for International Settlements (BIS) is initiating Project Rialto to enhance instant cross-border payments by integrating a modular foreign exchange component with settlement in wholesale central bank digital currencies (wCBDC).

Named after Venice’s iconic Rialto Bridge, which spans the Grand Canal, Project Rialto is a collaborative effort involving the BIS Innovation Hub’s Eurosystem and Singapore Centres, alongside several central banks. The project aims to develop an automated FX settlement layer using wCBDC as a secure settlement asset, potentially benefiting interlinked instant payment systems and digital asset platforms.

Improving cross-border payments is a major international policy objective and a priority for the G20. Currently, FX services provided by correspondent banks can be costly, slow, and complex, posing liquidity, credit, and settlement risks to participants.

The BIS highlighted the potential of decentralized solutions, CBDCs, and interconnected payment infrastructures to enhance cross-border payments. “Decentralized solutions, CBDC and interlinked payment infrastructures are considered promising avenues to improve cross-border payments. How they interact has not yet been explored and could yield answers that advance cross-border payments globally,” stated the BIS.