The Bank for International Settlements (BIS) has released an interim report on Project Rialto, an initiative aimed at improving retail cross-border payments through interlinked instant payment systems and settlement in central bank money (CeBM). As part of a broader effort to enhance payment efficiency globally, this project explores ways to reduce costs, enhance speed, and improve transparency in cross-border transactions.
The Challenges of Retail Cross-Border Payments
Cross-border retail payments, valued at over $800 billion annually, remain costly, slow, and complex. Unlike domestic transactions, these payments face significant friction due to compliance requirements, foreign exchange (FX) processes, and market infrastructure inefficiencies. Project Rialto specifically addresses FX- and settlement-related barriers, proposing an automated FX conversion layer combined with tokenised CeBM settlement.
Project Rialto’s Approach
The initiative is a collaborative effort between the BIS Innovation Hub’s Eurosystem and Singapore Centres, along with central banks from France, Italy, Malaysia, and Singapore. It builds upon previous research on instant payments and tokenised financial infrastructures, with a focus on:
- Interlinking instant payment systems (IPS) to allow real-time cross-border transactions.
- Automating FX conversion through a transnational network, reducing liquidity and settlement risks.
- Using tokenised central bank money (CeBM) as a safe and efficient settlement asset.
A key component of the project is testing whether an automated FX layer can streamline payment chains, making transactions faster and less reliant on costly intermediaries. The proof of concept (PoC) will examine how IPS can be seamlessly integrated with next-generation market infrastructure.
Potential Benefits and Considerations
By automating FX conversion and leveraging CeBM, Project Rialto aims to:
- Lower transaction costs for consumers and businesses.
- Improve access to cross-border payment services, particularly for remittances.
- Enhance security and efficiency through tokenisation and programmable financial systems.
However, the project must also navigate regulatory challenges, digital fraud risks, and potential liquidity concerns. The report outlines considerations for governance, compliance, and risk management that must be addressed for widespread adoption.
Next Steps
The interim report provides a detailed examination of the project’s objectives and methodology, with further insights to be shared in the final phase. Future developments will focus on refining the PoC, testing integration with financial market infrastructures, and assessing the real-world viability of tokenised CeBM for cross-border transactions.
