PROJECT NEXUS (Syllabus: GS Paper 3 – Economy)

News-CRUX-10     2nd July 2024        
Samadhaan

Context: The Reserve Bank of India (RBI) recently joined Project Nexus.


Project Nexus

  • About: It a multilateral international initiative to enable instant cross-border retail payments by interlinking domestic Fast Payments Systems (FPSs).
  • It is conceptualised by the Innovation Hub of the Bank for International Settlements (BIS).
  • Objective: To integrate global instant payment systems (IPS) to facilitate seamless cross-border transactions. It's the first BIS project in the payments sector moving towards implementation.
  • Benefits of the Platform:

oStandardization: Nexus standardizes IPS connections globally, eliminating the need for bespoke connections for each country.

oEfficiency: Enables a single connection for a fast payments system to reach all other connected countries, enhancing speed and reducing complexity in cross-border payments.

  • Countries Involved in Project Nexus:

oFounding Members: India, Malaysia, Philippines, Singapore, and Thailand are the founding members of Project Nexus.

oExpansion Plans: Indonesia is set to join the platform in the future, expanding its reach within ASEAN and beyond.


Fast Payments Systems (FPSs)

  • It is an electronic payments system which facilitates inter-bank fund transfer and sends confirmation of payment to the receiver and originator within a minute or less (the time duration may vary across different geographies and payment schemes).
Samadhaan