Tokenised bank liabilities have the potential to deliver more than USD 50 billion in annual cost savings in cross-border foreign exchange (FX) settlement by 2030, according to a new industry report led by the International Swaps and Derivatives Association (ISDA) and Ant International under the Monetary Authority of Singapore’s (MAS) Project Guardian initiative.
The report, “Cross-Border Payments and FX Settlement with Tokenised Bank Liabilities”, presents the findings of a live industry pilot conducted with Standard Chartered, Bank of New York Mellon, and Bank of China (Hong Kong). It demonstrates how tokenised deposits—digital representations of commercial bank money—can be issued and used across interoperable blockchain networks to achieve near-instant FX settlement without leaving the regulated banking system.
The report estimates that such a model could lower the cost of cross-border payments by up to 12.5%, translating into more than USD 50 billion in savings annually by the end of the decade, based on 2023 estimates of global transaction costs. “This initiative showcases the value of combining innovative financial technologies with industry collaboration to build scalable and compliant digital asset ecosystems,” said Ji Gang, General Manager of Ant Digital Technologies, in the official press release.
Real-time FX settlement, without correspondent banks
The pilot focused on enabling payment-versus-payment (PvP) settlement of tokenised bank liabilities in multiple currencies across separate blockchain networks, using smart contracts that execute simultaneously once both sides of an FX trade are confirmed. The trial was designed to operate without relying on traditional correspondent banking systems—one of the key friction points in today’s cross-border payments infrastructure.
Ant International’s Whale platform served as the on-chain liquidity provider, facilitating FX conversion between tokenised Singapore dollar and US dollar deposits. “Whale converted SGD to USD tokens—and back—using smart contracts, enabling banks to access liquidity directly on-chain,” the report noted. Chainlink’s Cross-Chain Interoperability Protocol (CCIP) was also used to enable secure messaging and value transfer across the different networks.
Scott O’Malia, Chief Executive of ISDA, said the pilot was a proof point that tokenised commercial bank money can support regulated FX settlement use cases at scale. “The pilot highlights the viability of using tokenised bank liabilities to enable atomic settlement of FX transactions in compliance with existing regulatory frameworks,” he said.
Embedding compliance into the payment stream
A key innovation highlighted in the report is the ability to embed regulatory compliance, identity verification, and rule-based controls directly into the settlement layer of a tokenised transaction. This capability allows for strict adherence to anti-money laundering (AML), know-your-customer (KYC), and capital controls—without the delays typically associated with post-transaction checks.
The reference architecture proposed in the report incorporates standardised identifiers, programmable payment logic, and permissioned access to transaction data for regulators. “By embedding compliance into the transaction workflow, the system enables faster settlement while maintaining the integrity of regulatory requirements,” the report stated.
MAS said the findings support Singapore’s broader goal of developing open and interoperable digital financial infrastructures.
“As the industry explores new forms of digital money, such as tokenised deposits and central bank digital currencies, we must ensure they are interoperable across networks and jurisdictions,” said Alan Lim, Head of FinTech Infrastructure Office at MAS.
Legal and technical challenges remain
Despite the promise, the report cautions that a number of technical, legal, and operational challenges still need to be addressed before tokenised bank liabilities can be widely adopted in FX settlement and payments. These include the lack of a harmonised legal framework for digital asset finality, fragmented digital identity systems, and the absence of global standards for smart contract safety and interoperability.
The pilot also found that achieving true atomic PvP settlement across independent systems requires tight synchronisation of transaction states, timeouts, and fallback mechanisms. To that end, the report recommends the development of industry-wide standards for interoperability protocols, legal definitions of tokenised deposits, and governance models for shared payment infrastructure.
ISDA and its partners propose a modular reference architecture that can be used by banks, regulators, and technology providers to scale up tokenised deposit platforms. The model supports flexible integration with legacy systems, API-based compliance tools, and cross-network messaging protocols.
Tokenised money beyond theory
What sets the Project Guardian pilot apart is its movement beyond conceptual demonstrations. While many central banks and financial institutions have explored tokenised money in sandbox environments, this initiative placed tokenised bank liabilities into real transactional flows, under real compliance constraints.
The involvement of major global institutions underscores growing institutional momentum behind programmable money infrastructures. Standard Chartered, which has been active in several digital asset pilots globally, said in the report that tokenised bank liabilities offer an alternative path to achieving real-time cross-border clearing without requiring the issuance of stablecoins or central bank digital currencies (CBDCs).
“This is not just about cost reduction,” said Ji Gang of Ant Digital Technologies. “It’s about building a more intelligent and connected financial ecosystem, where compliance, efficiency, and liquidity can co-exist in real time.”
As central banks and industry consortia continue to explore the future of digital money, the findings from this pilot could serve as a blueprint for commercial bank adoption of tokenised settlement systems—offering a regulated, interoperable, and cost-efficient alternative to legacy correspondent banking rails.
