The Bank for International Settlements (BIS) and its partners, including central banks and instant payment system operators from Malaysia, the Philippines, Singapore, Thailand, and now the Reserve Bank of India, have announced the completion of the comprehensive blueprint for phase three of Project Nexus.
It is the first BIS Innovation Hub project in the payments area to move towards live implementation. BIS will play an advisory role as Project Nexus sets up the operational scheme and is open to potential new participants across the globe.
This development will enable participants to progress towards seamlessly connecting their instant payment systems.
The BIS and ASEAN-5 central banks aim for the real-world implementation of Nexus to be global rather than regional and will continue to engage more widely with central banks and IPS operators across the world. Bank Indonesia will continue its involvement as a special observer.
Project Nexus aims to standardise connections between domestic IPS, allowing operators to connect through a single link to reach all other countries in the network.
The partner central banks and IPS operators have agreed to establish the Nexus Scheme Organisation (NSO) to manage the Nexus scheme and achieve instant cross-border payments at scale.
The NSO will be owned by the participating central banks and IPS operators, while BIS will continue to provide technical advisory support.
This initiative follows a successful prototype phase connecting IPS from the Eurosystem, Malaysia, and Singapore.
To illustrate how Project Nexus will function in practice, an example user journey demonstrates how an individual sender would use their existing payment service provider channel (e.g., an app) to make a payment through Nexus.
The image below details the steps taken by Nexus behind the scenes to facilitate the payment. Note that there is no ‘Nexus app’ and payment senders do not register with or interact directly with Nexus.
In November 2022, central banks from Indonesia, Malaysia, the Philippines, Singapore, and Thailand signed a Memorandum of Understanding on regional payment connectivity, with additional support from Brunei Darussalam, Laos, and Vietnam.
The project, part of the G20 Roadmap for Enhancing Cross-border Payments, aims to significantly improve the speed, cost, transparency, and access to cross-border payments.
In the next phase of Nexus, the BIS Innovation Hub Singapore Centre will support a coalition of countries who are interested to implement Nexus in the real world and use it to connect their domestic IPS.
Bank Negara Malaysia Governor Abdul Rasheed Ghaffour said,
“With the completion of Phase three, we are another step closer to implementing a next generation cross-border payment infrastructure. 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.
This will not only benefit our nations but also pave the way for greater global payment connectivity. We welcome India to the next phase of Project Nexus.”
BIS General Manager Agustín Carstens said,
“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.
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.”
A report detailing the conclusions of phase three, along with a scheme rulebook, technical guides, and ISO 20022 message specifications, has been published.
