Tokenization: the Bank of England, Singapore and Thailand connect blockchain and traditional foreign exchange

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The trial is called Meridian FX APAC. It tested the settlement of foreign exchange transactions in central bank currency between tokenized and traditional infrastructures. London is preparing the same junction for its government bonds on blockchain.

June 1974, Cologne. The German regulator closes the Herstatt bank at the end of the German day. His counterparties had already paid him Deutsche Marks, but the dollars owed in return to New York never left.

Since then, its name has designated settlement risk in foreign exchange. One leg of the transaction leaves, the other never.

However, the problem has not disappeared. According to the Bank for International Settlements' 2025 triennial survey, cited by MAS, more than $1.4 trillion in daily foreign exchange settlements remained fully exposed to this risk in April 2025. This is 10% of the total.

The parade is therefore called PvP, for “payment against payment”. The two currencies move together, or nothing moves.

Meridian FX APAC applies this principle between systems that do not speak the same language. There are RTGS, these real-time gross settlement systems which operate large transfers between banks. And there are distributed ledgers (DLT), the technological family of which blockchain is a part.

The prototype comes from Partior, a DLT settlement network founded by JPMorgan, DBS, Standard Chartered and Temasek. It thus plays the “synchronization operator”: it matches the instructions, verifies that the funds are reserved on both sides, then triggers the settlement.

If one leg fails, everything is canceled. All three central banks simulated insufficient funds, invalid account IDs and temporary outages. In each case, the trader completed the settlement or undone the transaction entirely, according to the summary published by the Bank of England.

Finally, the second test concerned multilateral compensation. Banks balance their payments between themselves and only settle the net amount, which reduces the liquidity to be tied up. Technically feasible, conclude the three institutions, which do not quantify the economy.

On the other hand, the hardest part was keeping the same batch of transactions aligned while liquidity remained blocked. Calculating net positions was much less of a hassle.

In Singapore, the testing environment did not allow for funds to be reserved for a third party. The operator therefore maintained a dedicated escrow account, a patch that the Bank of England considers suitable for this test bench.

The political report published at the same time dampens enthusiasm. A technically atomic transaction does not, by itself, create a legally recognized settlement in multiple countries at once. The purpose of the regulation, governance, operator supervision and data sharing between authorities remain open.

Another warning: if the operator begins to hold funds or calculate net positions, its regulatory responsibilities change in nature.

The simulations also left out heavy topics, such as non-overlapping time slots, prolonged outages or real market participants. The Reserve Bank of Australia and the Central Bank of the Philippines followed the political aspect as observers.

For the crypto market, the message from London remains constant. The Bank of England prefers to see banks innovate with tokenized deposits rather than private stablecoins, and major British banks conducted their first such interbank transfers in September, according to Euronews.

The Bank of England wants to launch its synchronization service into production in 2028. This schedule, however, does not commit either the MAS or the Bank of Thailand, even if Singapore is already testing the tokenization of financial assets with Swift, UBS and Chainlink in its Guardian project.

Falling down the white rabbit hole in 2017, I went from avid reader to Editor-in-Chief of Journal du Coin until November 2026. I like to get involved behind the scenes of projects to bring my vision of a decentralized future. A lover of beautiful letters, I coordinate our teams to transform technical complexity into human, precise information without unnecessary jargon. Between entrepreneurship and writing, my mission is clear: popularize tomorrow, but do it today.

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Machine-translated from French