Any layer that settles value for many institutions eventually faces the question every financial market infrastructure faces: what happens when something goes wrong? The Principles for Financial Market Infrastructures (PFMI) exist to answer that question for systems others depend on, covering liquidity, operational resilience and recovery planning. Applying them early — while a network is still small — is how a settlement hub prepares for the day it matters more. This is general information, not legal, regulatory or financial advice.

Liquidity under stress

PFMI's liquidity expectations ask an infrastructure to hold sufficient resources to meet obligations even when a participant defaults or timing slips. For a hub, the relevant levers are its netting model, its prefunding arrangements and its access to reliable short-term assets. Netting reduces what must actually cross borders, which in turn reduces the liquidity that must be available at any moment — an advantage that stress testing should quantify rather than assume.

Operational resilience

A settlement layer must keep operating through disruption. That means the ledger, routing and rail adapters all need credible redundancy: a double-entry ledger with clear attribution, adapters to multiple rails so no single path is a hard dependency, and controls that degrade gracefully. Over-limit operations that become human approval requests, rather than silent failures, are part of the same thinking.

Recovery and orderly wind-down

PFMI expects a plan for recovery and, if necessary, an orderly wind-down. For a hub, that includes how participants exit, how obligations are settled if the network must stop, and how a regulator's single point of observation is used in a crisis. Recovery is not an admission of weakness; it is evidence the layer takes its role seriously.

Readiness, not certainty

Stress testing is an ongoing discipline. Its value is in exposing concentration and assumptions before they become failures, and in giving supervisors confidence that a systemically relevant layer can be governed.

In short

  • PFMI covers liquidity, operational resilience and recovery for infrastructures.
  • Netting and prefunding arrangements shape a hub's liquidity under stress.
  • Multiple rail adapters and a clear ledger support operational resilience.
  • Recovery and wind-down planning are part of the standard.
  • Testing exposes concentration before it becomes failure.

See how the settlement layers are built at /protocol/.