Project Nexus of BIS

Project Nexus of BIS

What is Project Nexus? Project Nexus is an international initiative conceptualized by the Innovation Hub of the Bank for International Settlements (BIS). It aims to enhance cross-border payments by interlinking multiple domestic Fast Payments Systems (FPSs) worldwide. The project is a significant step towards enabling instant, seamless, and efficient cross-border retail payments. It is the first project in the payments area by the BIS Innovation Hub to move toward live implementation, representing a major shift in the global payments landscape.

Key Features of Project Nexus:

• Objective: The core goal of Project Nexus is to connect domestic instant payment systems (IPS) across different countries, creating a platform that streamlines international payments. By establishing this connection, countries can achieve faster cross-border payments without needing to create unique connections between each pair of countries. This centralization makes it easier and faster to make cross-border transactions.
• Scope: Initially, Project Nexus connects the Fast Payment Systems (FPSs) of the Association of Southeast Asian Nations (ASEAN) countries, with India being one of the founding members.
  The countries involved at the outset are:
  • Malaysia
  • Philippines
  • Singapore
  • Thailand
  • India (with plans for future inclusion of Indonesia).
• Benefits:
  1. Speed: One of the most significant advantages of Project Nexus is its ability to facilitate cross-border payments within 60 seconds in most cases, making transactions faster compared to traditional methods.
  2. Efficiency: By centralizing connections via a single platform, Project Nexus eliminates the need for individual country-to-country connections, simplifying the process.
  3. Broader Reach: India and its partner countries will benefit from this multilateral framework, amplifying the reach of India's Unified Payments Interface (UPI) to the participating countries and facilitating easier Person-to-Person (P2P) and Person-to-Merchant (P2M) transactions.
• India's Involvement: The Reserve Bank of India (RBI) has been actively engaged in expanding the international reach of India's Fast Payments System, notably UPI, through bilateral agreements with countries like Bhutan, UAE, France, Sri Lanka, and Mauritius. Project Nexus builds on these bilateral connections, advancing India’s international payment capabilities by connecting it to a broader, multilateral network.

Bank for International Settlements (BIS) The BIS, established in 1930, is the international organization owned by 63 central banks, representing about 95% of global GDP. It serves as a hub for central bank cooperation and is instrumental in setting global standards for the financial sector.

The BIS supports central banks with its role as a platform for dialogue, innovation, and knowledge sharing.

• Innovation Hub: The BIS Innovation Hub is dedicated to advancing responsible innovation in financial technology, fostering collaboration between central banks, and exploring emerging technologies in the banking sector.
• Medium-term Strategy: BIS's strategy, BIS Innovation 2025, emphasizes leveraging technology and collaboration channels to enhance central banking, with a focus on meeting the challenges of a rapidly evolving global economy.
• Basel Banking Accords: The Basel Committee on Banking Supervision (BCBS), operating under the BIS, provides the Basel Accords, which are global guidelines for banking regulations and best practices aimed at ensuring financial stability.

Key takeaways
Project Nexus represents a transformative leap in the future of global payments by facilitating instant and efficient cross-border transactions. With India’s involvement, this initiative will significantly enhance the international use of UPI, benefiting millions of people and businesses across participating countries. Through Project Nexus, the BIS Innovation Hub aims to create a more interconnected, efficient, and fast global payment system, ultimately contributing to the broader goal of financial inclusion and economic integration.

Mind Sprint