KUALA LUMPUR (July 1): Bank Negara Malaysia (BNM) announced that Project Nexus, a multilateral platform that seeks to enhance cross-border payments, is ready to proceed to phase four, following the successful completion of its comprehensive blueprint in phase three.
The next phase will welcome the Reserve Bank of India, expanding the potential user base to India’s Unified Payments Interface (UPI) — the largest instant payment system (IPS) in the world — into the Project Nexus network. Existing participants include Bank Negara Malaysia, the central banks of the Philippines (Bangko Sentral ng Pilipinas), Singapore (Monetary Authority of Singapore) and Thailand (Bank of Thailand), alongside domestic IPS operators.
Project Nexus, coordinated by Singapore-based Bank for International Settlements (BIS), aims to revolutionise cross-border payments by connecting domestic IPS globally. It is designed to standardise 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.
Accordingly, BNM said Bank Indonesia will continue its association with the project with special observer status, continuing its contributions from phase three into the forthcoming development stage.
"With the completion of phase three, we are another step closer to implementing a next generation cross-border payment infrastructure,” governor of BNM Abdul Rasheed Ghaffour said in a joint statement by the central banks on Monday.
“The comprehensive blueprint for taking Project Nexus forward is a product of the strong cooperation of participating Asean central banks working closely with the BIS to deliver a world-leading cross-border payment infrastructure,” he added.
Meanwhile, general manager of BIS Agustín Carstens said: "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,"
"When implemented, it will greatly enhance cross-border payments in line with both the G20 cross-border payments programme and our mission to develop public goods in the technology space to support central banks and improve the functioning of the financial system," Agustín added.
He also said that 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.
In addition, BNM said in order to facilitate the live implementation, the partner central banks and IPS operators have agreed to establish the Nexus Scheme Organisation (NSO).
The entity 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.