BSP, other central banks gear up for Project Nexus implementation

The Bangko Sentral ng Pilipinas (BSP) and other central banks in Asia recently completed the comprehensive blueprint for phase three of Nexus, a project that seeks to enhance cross-border payments by connecting multiple domestic instant payment systems (IPS) globally.

In a joint statement, the BSP, Bank for International Settlements (BIS), Reserve Bank of India, Bank Negara Malaysia, Monetary Authority of Singapore, and Bank of Thailand said the completion of the comprehensive blueprint will now allow ready participants to work towards the next stage of seamlessly connecting their instant payment systems.

Nexus, a BIS Innovation Hub project, is designed to standardize the way domestic IPS connect to one another.

Rather than an IPS operator building custom connections for every new country to which it connects, the operator only needs to make one connection to Nexus.

The single connection would allow the IPS to reach all other countries in the network.

For phase four, the Central Bank of Malaysia, BSP, the Monetary Authority of Singapore, the Bank of Thailand and domestic IPS operators who worked together in phase three, joined by the Reserve Bank of India, will expand the potential user base to India’s Unified Payments Interface (UPI).

UPI is currently the world’s largest IPS.

Bank Indonesia (BI), meanwhile, will continue its association with the project with special observer status.

BI took part in phase three and will continue in this capacity to follow the project in the next stage of its development.

“I wish our partners in Nexus every success as they advance the project from concept to reality. This is the first BIS Innovation Hub project that central banks are moving towards a live phase together with instant payment providers,” BIS General Manager Agustin Carstens said.

Carstens said that once implemented, Nexus will greatly enhance cross-border payments.

“Even with just the first wave of connected countries, Nexus has the potential to connect a market of 1.7 billion people globally, allowing them to make instant payments to each other easily and cheaply,” he added.

To facilitate live implementation, the partner central banks and IPS operators have agreed to work towards establishing a new entity, the Nexus Scheme Organization (NSO), which will be responsible for managing the Nexus scheme, and continuing the mission to achieve instant cross-border payments at scale.

The NSO will be wholly owned by the central banks and/or IPS in participating countries, depending on the specific domestic structures.

While the BIS will not own or operate the NSO, it will continue to play a technical advisory role as participating countries work towards taking Nexus live.

It will also facilitate cooperation among members and the entry of new participants.

“Empowered by a shared vision of efficient and reliable cross-border payments, the collaboration between the BIS and ASEAN central banks has been rather effective, and I’d like this to continue. Central banks have always played a role in payments as a public good. With Nexus, this role will be extended to cross-border payments, maximizing the network effects,” BSP Governor Eli Remolona Jr. said.

“Thus, the Bangko Sentral ng Pilipinas will continue to work with the Philippine payments industry, BIS and other interested countries towards its live implementation. We look forward to Nexus providing overseas Filipinos with a cheaper and faster means to send money to family back home, and facilitating the globalization of Filipino small and medium scale enterprises,” he added. (PNA)

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