Project Nexus

Context: The Reserve Bank of India (RBI) has joined Project Nexus. a multilateral international initiative to enable instant cross-border retail payments by interlinking domestic Fast Payments Systems (FPSs). 

What is Project Nexus?

  • It is a multilateral international initiative to enhance cross-border payments by connecting multiple domestic instant payment systems (IPS) globally. 
  • Project Nexus is conceptualised by the Innovation Hub of the Bank for International Settlements (BIS)
  • It aims to connect the IPSs of India, Malaysia, Philippines, Singapore, and Thailand.

Why the Need?

  • The RBI has been collaborating bilaterally with various countries to link India’s Fast Payments System (FPS) – UPI, with their respective FPSs for cross-border Person to Person (P2P) and Person to Merchant (P2M) payments. 
  • While India and its partner countries can continue to benefit through such bilateral connectivity of FPS, a multilateral approach will provide further impetus to the RBI’s efforts in expanding the international reach of Indian payment systems.
  • In over 70 countries today domestic payments reach their destination in seconds at near-zero cost to the sender or recipient. Connecting these IPS to each other can enable cross-border payments from sender to recipient within 60 seconds (in most cases).

Benefits of the Platform

  • Project Nexus is designed to standardise the way IPS connect to each other
  • Rather than a payment system operator building custom connections for every new country that it connects to, the operator can make one connection to the Nexus platform. 
  • This single connection allows a fast payments system to reach all other countries on the network and significantly accelerate the growth of instant cross-border payments.

PYQ 2017:

Q. Which of the following is a most likely consequence of implementing the ‘Unified Payments Interface (UPI)’?

(a) Mobile wallets will not be necessary for online payments.

(b) Digital currency will totally replace the physical currency in about two decades.

(c) FDI inflows will drastically increase.

(d) Direct transfer of subsidies to poor people will become very effective.

Answer: (a)

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