PROJECT NEXUS - ECONOMY
News: RBI, ASEAN to create platform
for instant retail payment
What's in the news?
●
The Reserve Bank of India (RBI) has joined Project Nexus, a multilateral international
initiative to enable instant cross-border retail payments by interlinking
domestic Fast Payments Systems (FPSs).
Key takeaways:
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India’s Unified Payments Interface (UPI) and FPSs of Malaysia, the Philippines, Singapore and Thailand will be
interlinked through Nexus.
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Going ahead, the platform can be extended to more
countries.
Project Nexus:
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Project Nexus is conceptualised by the Innovation
Hub of the Bank for International Settlements (BIS).
Aim:
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It seeks to enhance
cross-border payments by connecting multiple domestic instant payment systems
(IPS) globally.
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Connecting these IPS to each other can enable
cross-border payments from sender to recipient within 60 seconds (in most
cases).
Collaboration:
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The Reserve Bank of India has been collaborating
bilaterally with various countries to link India’s Fast Payments System (FPS) –
UPI, with their respective FPSs for cross-border Person to Person (P2P) and
Person to Merchant (P2M) payments.
●
While India and its partner countries can continue
to benefit through such bilateral connectivity of FPS, a multilateral approach
will provide further impetus to the RBI’s efforts in expanding the
international reach of Indian payment systems.
●
In over 70
countries today domestic payments reach their destination in seconds at
near-zero cost to the sender or recipient.
Benefits of the
Platform:
1. Reduce the Burden of
Connection in Silos:
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Project Nexus is designed to standardise the way
IPS connect to each other.
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Rather than a payment system operator building
custom connections for every new country that it connects to, the operator can
make one connection to the Nexus platform.
2. Single Connection:
●
This single connection allows a fast payments
system to reach all other countries on the network.
3. Spur the Growth of
Cross-border Transactions:
●
Nexus could significantly accelerate the growth of
instant cross-border payments.
Go back to basics:
Countries Connected to
Project Nexus:
●
Project Nexus aims to connect the FPSs of four Association of Southeast Asian Nations
(ASEAN) — Malaysia, Philippines, Singapore, and Thailand; and India, who
would be the founding members and first mover countries of this platform.
●
An agreement on this was signed by the BIS and the
central banks of the founding countries i.e., Bank Negara Malaysia (BNM), Bank
of Thailand (BOT), Bangko Sentral ng Pilipinas (BSP), Monetary Authority of
Singapore (MAS), and Reserve Bank of India on June 30, 2024, in Basel,
Switzerland.
● Indonesia will also join the platform in future.