The Bank for International Settlements (BIS) is launching Project Rialto to explore how instant cross-border payments could be improved using a modular foreign exchange component combined with settlement in wholesale central bank digital currencies (wCBDC).
Named after the famous bridge in Venice which connects two sides of the Grand Canal, Project Rialto is a collaboration of the BIS Innovation Hub Eurosystem and Singapore Centres in partnership with several central banks. It explores a new automatic FX settlement layer using wCBDC as a safe settlement asset that could be deployed for interlinked instant payment systems or digital asset systems.
Improving cross-border payments is an explicit international policy goal and a priority of the G20. FX is a key component of cross-border payments but currently, the FX services facilitated by correspondent banks can be costly, slow and complex, and they expose participants in the payments chain to liquidity, credit, and settlement risks.
States the BIS: "Decentralised 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."