Settling both currency legs of a foreign exchange trade together on a ledger.
Proof of concept1Pilot4Live (limited)5Live (scaled)1
Why tokenise?
Draft analysis · not yet reviewed by the editor · updated 12 Oct 2026. The flows below are simplified for general understanding. Real implementations vary a great deal and are often far more complex.
In a currency trade each bank pays its side through a different country's payment system, often hours apart, so one bank can pay and never receive the other currency. A shared ledger holding both currencies as tokens can swap them in a single step, or not at all, at any hour. That extends protection that today mainly covers big currencies and big banks to everyone else.
Improves an existing processSettling both legs together (payment versus payment, or PvP) already exists: CLS, owned by the banks, does it for 18 major currencies. Tokenisation offers a second route that is open at all hours, settles trade by trade in seconds and can reach currencies and firms CLS does not. Today this runs inside one bank's network (J.P. Morgan's Kinexys offers on-chain FX to its clients), on shared bank networks such as Partior, and in central bank projects (Agorá, mBridge). Between different banks it is still mostly at test stage.
The problem today
FX settlement risk is the danger that a bank pays away one currency and the other side fails before paying the other. It is often called Herstatt risk after the German bank closed by regulators on 26 June 1974, which left counterparties unpaid, shook trust between banks and led to the creation of the Basel Committee.[1]
The sums are huge and a large share is still unprotected. On an average day in April 2025 over $14 trillion of FX payment obligations were settled; only about 36% went through PvP, and about 10% was settled gross between two banks with no protection at all.About $1.4 trillion a day settled gross bilaterally, fully exposed to settlement risk (BIS, April 2025)[1]
Protection is weakest outside the major currencies. Only 12% of settlement in currencies that CLS does not cover went through PvP.[1]
Many trades are not settled PvP because firms cannot get access to a PvP service, the trade type is not eligible, or the currency pair is not covered. About a quarter of the unprotected settlement was eligible but still settled gross.Among ineligible trades: 57% lacked access, 37% were ineligible trade types, 36% ineligible currency pairs (reasons overlap)[1]
Existing PvP can be too costly for smaller firms (fees and onboarding), and its fixed daily window may not match when firms have liquidity.[2]
The problem is not getting much smaller. In April 2022 about a third of deliverable FX turnover, some $2.2 trillion a day, was at risk, up from $1.9 trillion in 2019.$2.2 trillion a day at risk in April 2022 (BIS)[2]
Today vs tokenised (simplified)
End to end:two business days after the trade, settled within a daily window→seconds to minutes, any hour (within one network) · Timings for the tokenised lane come from single-bank services and small tests, not market-wide use.
Todayend to end: two business days after the trade, settled within a daily window
Two banks or a bank and a clientAgree the trade, for example sell dollars and buy euros, for settlement usually two business days laterseconds
Back officesConfirm and match the trade detailssame day
Settlement routeIf both currencies and both firms qualify, send the trade to CLS; otherwise settle it directly between the two banks or inside a banking groupbefore settlement day
CLS (protected route)Nets each member's payments and settles both currencies together in a short daily window when the relevant central bank systems are all opena few hours on settlement day
Paying bank (unprotected route)Pays its currency through its correspondent bank in that currency's country, during that country's business hourslocal business hours on settlement dayremoved
Paying bank (unprotected route)Waits for the other currency to arrive in another time zone, exposed to the full amount if the other side failshours, across time zonesremoved
Both banksCheck correspondent (nostro) accounts to confirm the money arrived and chase any failuressame day to next dayremoved
Tokenisedend to end: seconds to minutes, any hour (within one network)
Two parties on the shared ledgerAgree the trade, at any hour the network is openseconds
Each partyLocks the currency it is paying, held as tokenised deposits or central bank money, on the ledgerseconds
Shared ledgerSwaps both currencies in one step; if either side is missing, nothing movesseconds to about a minute
Both partiesSee the final position on the same record, with no correspondent accounts to checkimmediately
Each partyMoves balances back into ordinary bank or central bank accounts when neededduring payment system hours
Both currencies change hands in one step, so neither side can pay without being paid. This is what CLS already offers for major currencies; on a ledger it can run trade by trade, at any hour and in currencies CLS does not cover. Shown in BIS-led tests (Agorá PvP scenarios, mBridge FX transactions) and offered by Partior through partners, but no live inter-bank PvP volumes have been published.
Theory · high confidenceMeaningfulAs networks grow
Target pool: about $1.4 trillion a day settled with no protection (BIS, April 2025)Independent study[1]
Needs counterparties on the ledgerNeeds cash on the ledgerNeeds smart contracts
The biggest remaining exposures are in currencies CLS does not cover and among firms that cannot join a PvP service. A shared ledger with cheaper access could close part of that gap. The BIS notes private firms are building ledger-based services that settle only if both sides pay, and points to its own projects such as Agorá.
Theory · high confidenceMeaningfulAs networks grow
Needs counterparties on the ledgerNeeds cash on the ledger
Central banks can put their own currencies on a shared platform so banks settle FX directly in currencies poorly served by existing PvP. The mBridge pilot in 2022 ran over 160 real-value payment and FX PvP transactions among 20 banks in four jurisdictions, worth over $22 million. It remains a small, central-bank-run platform.
Theory · low confidenceMarginalAs networks grow
Needs counterparties on the ledgerNeeds cash on the ledgerNeeds smart contracts
Instead of waiting two business days, a client can convert dollars to euros and have the money in seconds. Siemens and the trading firm B2C2 do this today inside J.P. Morgan's network.
EvidencedMeaningfulAvailable now
Needs counterparties on the ledgerNeeds cash on the ledger
Kinexys Digital Payments (blockchain deposit accounts): Siemens completed near-instant US dollar to euro foreign exchange payments on Kinexys, and the trading firm B2C2 completed a dollar to euro FX settlement on the network, with sterling to follow. J.P. Morgan describes the settlement as near-instant and available around the clock but gives no timings, volumes or detail on whether both legs settle simultaneously.[5]
FX can be settled at weekends and outside the hours when the relevant payment systems overlap. B2C2 cites round-the-clock access to FX liquidity for its trading; Siemens cites escaping limited settlement windows.
EvidencedMeaningfulAvailable now
Needs cash on the ledgerNeeds counterparties on the ledger
Kinexys Digital Payments (blockchain deposit accounts): BMW moved money from euros in Frankfurt to dollars in New York between its own Kinexys accounts outside traditional settlement windows and without manual intervention; J.P. Morgan describes the FX settlement as running 24/7/365. No timings or amounts were disclosed.[6]
With PvP available at any hour, banks could use short intraday FX swaps to move liquidity between currencies for just a few hours. Partner announcements by Partior and Finteum describe this, but no live use has been reported.
Theory · low confidenceMarginalFuture state
Needs counterparties on the ledgerNeeds cash on the ledger
Where it is now
11 tracked deployments, 6 live. 2 of 6 benefits evidenced in production.
Proof of concept1Pilot4Live (limited)5Live (scaled)1
The full potential
FX is the largest market in the world and still carries more than a trillion dollars a day of unprotected settlement. Tokenised PvP is unlikely to replace CLS for major currencies, where netting makes CLS very efficient. Its likely role is to cover what CLS does not: emerging-market currencies, smaller banks and firms, trades outside CLS hours, and corporate treasury flows. That needs several currencies on connected ledgers, ideally in central bank money.
Tokenised money in many currencies on the same or connected ledgers, from banks or central banks
Access for smaller banks and non-banks at a cost that beats settling directly with each other
Ways to economise on cash, such as netting before settlement or intraday credit, since gross settlement needs full pre-funding
Clear legal settlement finality for on-ledger swaps across jurisdictions
Longer central bank operating hours so tokens can be topped up and redeemed when needed
Who it suits
Bank, Market infrastructure (FMI), Central bank, Non-financial company, Fintech or technology firm · effort: high · value depends on counterparties joining
Corporates can start through a bank's own network where on-chain FX is offered, but only in the currencies that bank supports
Banks need tokenised deposit capability or membership of a shared network, plus FX liquidity in each currency on the ledger
Inter-bank PvP needs both banks and both currencies on the same or linked ledgers
Limits and open questions
Losing the benefit of netting. CLS nets each member's payments and says this cuts the cash they must pay in by over 96%. Settling each trade gross and in full on a ledger needs much more cash up front, which may make it dearer for high-volume banks.[8]
Few currencies are on ledgers today. J.P. Morgan says only selected currencies are available on its network, and shared networks such as Partior run in a handful.[5]
Tests are small and partly manual. The Agorá real-value test moved about CHF 800,000 across 30 transactions, with the FX amount confirmed by hand and no link yet to central bank or bank core systems.[3]
The main barriers today are access, eligibility and cost rather than technology, and actual settlement failures are rare (about 0.01% of obligations). A new ledger only helps if it is cheaper and easier to join than existing PvP services.[1]
IOSCO did not find that tokenisation was yet leading to much wider use of atomic or instant settlement, given its liquidity and operational costs.[9]
[3]Project Agorá— BIS Innovation Hub, 2026. Accessed 12 Oct 2026.A
[4]Project mBridge: connecting economies through CBDC— BIS Innovation Hub, 26 Oct 2022. Accessed 12 Oct 2026. 2022 pilot with 20 banks, over 160 payment and FX PvP transactions worth over $22 million..A
[7]News and insights— Partior. Accessed 12 Oct 2026. Lists partner announcements on 24/7 PvP with Finteum/Adhara (Sept 2025) and OSTTRA/Baton (June 2025)..B
[8]CLSSettlement— CLS Group. Accessed 12 Oct 2026. Operator page; says CLS settles over $8 trillion of payments a day in 18 currencies for 75+ settlement members..B