mCBDCs, DLT cut settlement frictions in Project Agorá tests

In July 2026 Lloyds Banking Group executed live, real-value cross-currency settlements on Project Agorá, running GBP, EUR and CHF legs in a single, simultaneous workflow on a permissioned programmable ledger. Central banks and major commercial banks are running pilots that use permissioned multi-CBDC (mCBDC) networks and distributed ledger technology (DLT) to replace traditional Nostro/Vostro correspondent chains.

During the Project Agorá test a Lloyds client initiated a Swiss franc payment. The shared ledger performed real-time FX conversion, settled the sterling leg and credited the beneficiary in one coordinated transaction. Project Agorá’s permissioned ledger supports wholesale central bank digital currencies alongside tokenised commercial deposits, enabling peer-to-peer settlement between banks without routing funds through US dollar clearing rails.

A separate initiative, Project mBridge, is led by the BIS Innovation Hub with several Asian and Middle Eastern central banks. That platform runs a permissioned DLT using Byzantine Fault Tolerant consensus. Participating central banks operate validator nodes and issue wholesale CBDCs directly to commercial banks for cross-border settlement.

Industry participants describe two structural issues in correspondent banking: large pre-funding requirements for Nostro and Vostro accounts and ledger isolation between institutions. Banks hold idle foreign balances to cover multi-day settlement windows, and time-zone and messaging gaps can create Herstatt-style settlement risk where one leg completes while the reciprocal leg remains unsettled.

The technical designs tested combine legacy messaging standards with shared ledgers. Payment-versus-payment smart contracts execute reciprocal transfers atomically so both legs finalise together. Cross-chain arrangements use hashed time-locked contracts to encumber assets until cryptographic proof is presented. To protect privacy and confidentiality, platforms submit zero-knowledge proofs to validators so sanctions checks and solvency verifications can run without exposing raw account data.

Systems under test use event-driven, modular processing cores that decouple transaction orchestration from ledger consensus. Implementations employ asynchronous messaging layers such as Apache Kafka and gRPC to keep authorization responsive while DLT consensus completes. Integration work includes support for multiple asset types, on-chain AML screening and parallel cryptographic regimes that combine FIPS-certified hardware security modules for legacy rails with multi-party computation and threshold signatures for DLT keys.

Tests also target liquidity-saving mechanisms. On-chain queued netting and circular payment optimisation have reduced intraday liquidity requirements in trials by as much as 70 percent. Engineers are running dual cryptographic stacks to support interoperability between ISO 20022 RTGS workflows and new tokenised settlement layers.

Project Agorá and Project mBridge are active pilots that combine instruction, FX conversion and settlement into single, finalised events while preserving existing bank relationships and regulatory oversight.