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Liquidity management in a multi-currency corridor network


Cross-border payments are notoriously inefficient, time consuming and expensive. Depending on where you are sending the money to, it can take anywhere up to 10 days and cost up to 10% of the value of the transfer.1 Cross-border payments rely on an international network of correspondent banks, which act as gateways into the payments system of that country. However, these banks can have restricted opening hours and operate in different time zones, delaying the processing and settlement of payments. In addition, every bank in the chain charges processing fees, which increases costs, while there is often little transparency into the foreign exchange rates charged for the transactions. 

Due to its ability to cut out the intermediaries involved in financial transactions, blockchain technology has the potential to transform the cross-border payments system. In particular, an integrated network of Central Bank Digital Currencies (CBDCs) could facilitate cross-border payments on a 24/7, real time basis.

J.P. Morgan’s Onyx division, in collaboration with two central banks – Banque de France (BdF) and the Monetary Authority of Singapore (MAS) – has recently conducted an experiment to text the efficacy of a multi-CBDC (mCBDC) network. This test specifically looked at an ‘integration’ model where multiple CBDCs were run on a single platform, also known as a shared corridor network.

The experiment

The experiment simulated cross-border and cross-currency transactions for Singapore Dollar (SGD) CBDC and €uro (EUR) CBDC, and was conducted using a permissioned, privacy-enabled blockchain based on Quorum® – a permissioned distributed ledger technology (DLT). 

An mCBDC shared corridor network using DLT has many advantages. It resolves the issue of reconciling disparate ledgers, thereby reducing inefficiency. It also allows better oversight and supervision from Central Banks over the movement of their respective CBDCs. Crucially, a permissioned shared network enables privacy. 

The experiment supported the following use-cases:

  • A Liquidity Pool Manager (LPM) that allows financial institutions to stake liquidity to enable transfers.
  • Cross border payment using the established liquidity pool as the CBDC exchange.
  • Payment-versus-payment (PvP) matching in a gross settlement mechanism.

Under this project, BdF and MAS jointly controlled the shared corridor network, via a consortium arrangement, with a mutually agreed rulebook and governance model. To simulate real-world usage, four fictious commercial banks were added to the network as participants in order to support both cross-border payments and PvP settlements.

The experiment involved the central banks issuing CBDC EUR and CBDC SGD tokens to their respective wallets. The banks could then initiate transactions on the network providing they had sufficient tokens available. The experiment did not consider a credit facility, and the central banks were responsible for destroying their tokens at the end of the project. 

The results

Four key outcomes from the experiment were achieved.

1. The test demonstrated interoperability across different types of cloud infrastructure. Blockchain nodes were set up across private and public cloud infrastructures in both France and Singapore. 

2. It was shown that the design of a common mCBDC network could allow the two central banks to have visibility on cross border payments, while retaining independent control over the issuance and distribution of their own CBDC. 

3. An experimental mCBDC network was established that incorporated automated liquidity pool and market-making service for EUR/SGD currency pairs. The use of smart contracts managed the EUR/SGD currency exchange rate on a daily basis.

4. The simulation of an experimental mCBDC network that showed that the number of correspondent banking parties involved in the payment chain for cross-border transactions can be reduced. Consequently, the number of contractual arrangements, the KYC (Know Your Customer) burden as well as the associated costs could be reduced.


The experiment provided a number of key insights into the feasibility and potential opportunities of using mCBDC platforms to facilitate cross-border payments. The project’s focus was on liquidity management and the creationsof a common multi-lateral settlement platform, and its findings have added to the recent research conducted on CBDC-based cross-border payment systems. We look forward to continuing to contribute to the creation of next-generation financial rails that make payments more open, inclusive, and sustainable.


1.BIS, October 2020. ‘Cross-border Payments – Innovating in a Changing World.’ Available  at: https://www.bis.org/review/r201015a.pdf. Accessed September 2021.