Bank of England Tests Cross-Border FX With Stablecoins
The pilot with Singapore and Thailand tested PvP settlement and netting between traditional systems and blockchain. Meanwhile, stablecoins are gaining ground in cross-border payments.
Key Takeaways
- The Bank of England tested cross-border FX settlement together with central banks in Singapore and Thailand through Project Meridian FX APAC.
- The pilot looked at payment-versus-payment and multilateral netting to reduce risk and need less liquidity.
- Stablecoins are gaining ground; in 2025, transaction volume was above $30 trillion, of which $6.1 trillion was for cross-border payments.
The Bank of England tested with central banks in Singapore and Thailand how cross-border currency transactions can be settled more safely and efficiently. The project, Project Meridian FX APAC, shows how traditional settlement systems and blockchain technology can work alongside each other, while stablecoins are increasingly emerging as an alternative payment method.
What the Project Tested
The pilot focused on payment-versus-payment, or PvP settlement. With this setup, one currency is only transferred if the counterpayment in another currency also actually happens. That is meant to reduce the risk that one party pays while the other does not.
The project also tested multilateral netting. This lets banks offset their payment obligations against each other instead of settling every transaction separately. That can reduce the amount of liquidity needed for these kinds of transactions.
According to the Bank of England, the pilot showed that transactions can be coordinated across conventional settlement systems and systems built on blockchain, without institutions having to use exactly the same infrastructure.
Stablecoins Are Gaining Ground
The pilot comes at a time when stablecoins are increasingly being seen as an alternative to traditional cross-border payments. They promise faster transfers and are often available 24/7, which makes them attractive for international transactions.
That trend is also visible in the numbers. In 2025, total stablecoin transaction volume was above $30 trillion (€27.1 trillion), of which $6.1 trillion (€5.5 trillion) was attributed to cross-border payments. That shows how quickly stablecoins are gaining ground in international payments.
Banks are moving along too: Japanese megabanks recently finished a yen stablecoin pilot for cross-border payments, with live transactions now in sight.
What This Means for Europe
For European crypto and payments markets, this matters because central banks are increasingly looking at ways to connect existing systems with blockchain-based infrastructure. The pilot shows that the debate is not just about crypto itself, but also about how traditional financial rails can work with new technology.
The Bank of England says a live synchronization interface should be in place by 2028, but that still requires legal agreements, regulation, and broader participation. So this is still a testing phase, even if the project does give a concrete picture of what future FX settlement could look like.