The central banks of India, Malaysia, Thailand, Singapore and the Philippines are working together to start an instant cross-border retail payments platform, the Bank of International Settlements (BIS) announced on Monday.

BIS, also dubbed the central bankers’ central bank, said the aim is to link each country’s instant digital payment system as part of Project Nexus. Project Nexus is a BIS Innovation Hub project that seeks to enhance cross-border payments by connecting multiple domestic instant payment systems (IPS) globally.

BIS and partners announced that they have completed the comprehensive blueprint for phase three of Project Nexus, which will allow ready participants to work towards the next stage of seamlessly connecting their instant payment systems.

Phase four will see Bank Negara Malaysia, Bangko Sentral ng Pilipinas, 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, expanding the potential user base to India’s Unified Payments Interface (UPI), the world’s largest IPS.

Meanwhile, Bank Indonesia (BI) 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.

“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,” Agustín Carstens, general manager of the BIS, said in a statement.

“This is the first BIS Innovation Hub project that central banks are moving towards a live phase together with instant payment providers. When implemented, it will greatly enhance cross-border payments in line with both the G20 cross-border payments program and our mission to develop public goods in the technology space to support central banks and improve the functioning of the financial system,” he added.

Project Nexus 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. This single connection would allow the IPS to reach all other countries in the network.

This work follows an earlier phase of development in which a prototype of Nexus was used to successfully connect the test versions of three established IPS: the Eurosystem’s TARGET Instant Payment Settlement (TIPS), Malaysia’s Real-time Retail Payments Platform (RPP) and Singapore’s Fast and Secure Transfers (FAST) payment system.

In November 2022, Bank Indonesia, Bank Negara Malaysia, Bangko Sentral ng Pilipinas, the MAS and the Bank of Thailand signed a Memorandum of Understanding (MoU) on Cooperation in Regional Payment Connectivity, which highlights the collaborative effort within the region towards establishing cross-border payment connectivity, including via fast payment linkages.

Since the signing of the MoU, Brunei Darussalam Central Bank, Bank of the Lao People’s Democratic Republic and the State Bank of Vietnam have joined the initiative.

Featured photo credits: Bank Negara Malaysia

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