PROJECT NEXUS

• Project Nexus is a multilateral initiative conceptualized by the Bank for International Settlements (BIS) to facilitate instant cross-border retail payments by interlinking domestic Instant Payment Systems (IPS). 
• This project aims to enhance the efficiency, speed, and cost-effectiveness of cross-border transactions, aligning with the G20's objectives of improving global payment systems.

Institutional Background

Bank for International Settlements (BIS):

• Established in 1930, headquartered in Basel, Switzerland.
• Owned by 63 central banks, including the Reserve Bank of India (RBI).
• Functions as the "bank for central banks," fostering monetary and financial stability globally.

Innovation Hub of BIS:

• Responsible for conceptualizing and developing Project Nexus.
• Collaborates with central banks and financial institutions to implement innovative financial solutions.

What is an Instant Payment System (IPS)?

An IPS is an electronic payment system that:

• Facilitates inter-bank fund transfers.
• Provides payment confirmation to both sender and receiver within one minute or less.
• Operates 24/7, ensuring continuous availability.
  • Example: Unified Payments Interface (UPI) in India.

Participating Countries and Expected Timeline

Founding Members:

• India (via UPI)
• Malaysia
• Philippines
• Singapore
• Thailand

Special Observer:

• Indonesia
• Expected Go-Live: By 2026

Objectives of Project Nexus

• Enhance Cross-Border Payments: Enable instant, low-cost, and transparent transactions across borders.
• Standardize Connectivity: Establish a unified framework for connecting various IPS, reducing the need for bilateral agreements.
• Promote Financial Inclusion: Provide accessible payment solutions to a broader population, including underserved regions.
• Align with G20 Goals: Support the G20's roadmap to improve the cost, speed, access, and transparency of cross-border payments.

Operational Framework

Nexus Scheme Organisation (NSO):

• Established to manage the operational aspects of Project Nexus.
• Oversees the implementation and governance of the interconnected IPS.

Technical Specifications:

• Utilizes ISO 20022 messaging standards for interoperability.
• Develops API specifications to facilitate seamless integration between different IPS.

Governance Model:

• Ensures compliance with international standards.
• Accommodates regulatory differences among participating countries while maintaining efficiency and resilience.

Significance for India

• Global Leadership: Positions India as a leader in digital payment infrastructure.
• Economic Integration: Strengthens economic ties with ASEAN countries through enhanced financial connectivity.
• Financial Inclusion: Expands access to digital payment systems for a larger population.
• Strategic Influence: Enhances India's influence in shaping global financial systems and standards.