The Reserve Bank of India (RBI) has signed an agreement with the ASEAN nations to  join Project Nexus.   

Founding Members and Future Expansion

• Founding Members: The FPSs of Malaysia, the Philippines, Singapore, Thailand, and India are the founding members and first movers of Project Nexus.
• Future Member: Indonesia is expected to join the platform in the future.

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What is Project Nexus?

• It is a multilateral international initiative
• Project Nexus is initiated by the Innovation Hub of the Bank for International Settlements (BIS).
• First in Payments Area: It is the first Bank for International Settlements (BIS) Innovation Hub project in the payments area to move towards live implementation.
• Objective: To enable instant cross-border retail payments.
• Interlinking Systems: Domestic Fast Payments Systems (FPSs) will be interconnected.
• Countries:
  • India’s Unified Payments Interface (UPI)
  • Fast Payments System (FPS) of Malaysia, the Philippines, Singapore, and Thailand

India’s Role in Project Nexus

• Bilateral Collaborations: The RBI has been linking India’s UPI with FPSs of various countries for cross-border Person to Person (P2P) and Person to Merchant (P2M) payments.
• Multilateral Approach: While bilateral connections are beneficial, a multilateral approach like Project Nexus will further expand the international reach of Indian payment systems.

Benefits of Project Nexus

• Standardization: Nexus standardizes the way instant payment systems connect with each other, eliminating the need for custom connections for every new country.
• Single Connection: Operators can make one connection to the Nexus platform, which then allows them to reach all other countries in the network.
• Speed and Cost Efficiency: The platform aims to enable cross-border payments within 60 seconds at near-zero cost to the sender or recipient, leveraging the existing instant payment systems.

Challenges of Project Nexus

• Technical Challenges

  • Interoperability: Ensuring smooth communication between different real-time payment networks.
  • Security and Fraud Prevention: Protecting cross-border transactions from fraud and security threats.

• Regulatory Hurdles

  • Compliance: Adhering to different regulatory frameworks across countries.
  • Legal Clarity: Defining legal responsibilities and liabilities clearly.

• Funding

  • Allocation of resources: Efficiently allocating resources for the development and implementation of the project.

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