FIVE central banks in Asia on Thursday announced they are a step closer to the live implementation of Project Nexus, a multilateral instant cross-border payments scheme.
In a joint statement released in their respective countries, the Bangko Sentral ng Pilipinas, the Monetary Authority of Singapore, the Bank Negara Malaysia, the Bank of Thailand and the Reserve Bank of India said they have formally incorporated Nexus Global Payments (NGP) to operationalize and manage the payments scheme.
NGP, incorporated in Singapore, will be run as a not-for-profit organization and is limited by guarantee.
In the statement, NGP said its incorporation by the five central bank partners in Project Nexus marks the transition of the Nexus initiative from a Bank for International Settlements’ (BIS) project to real-world implementation.
NGP said it is commencing a procurement process to appoint a Nexus Technical Operator (NTO) to undertake the technical build and run the day-to-day operations of the Nexus scheme.
NGP and the five central banks, however, have yet to give details on when the live implementation will be.
Good for OFWs, SMEs
NGP is a multilateral payment scheme dedicated to transforming cross-border transactions in line with the G20 Roadmap for Enhancing Cross-border Payments targets of speed, cost, accessibility, and transparency.
Project Nexus was initiated as an experimental project by the BIS Innovation Hub in 2021.
By reducing costs and enhancing accessibility, Project Nexus enables faster and more seamless payments for individuals and businesses worldwide.
In March 2023, the BSP and the four other central banks in the region announced they would connect their domestic instant payment systems (IPS) through Project Nexus.
BSP Governor Eli M. Remolona in 2023 said Project Nexus would provide overseas Filipinos with a “cheaper and faster means to send money to family back home.”
He added that the project would also help in facilitating the globalization of Filipino small and medium scale enterprises.
Michael Ricafort, RCBC’s chief economist, in a Viber message sent on Thursday, said the project would formalize “a more credible, secure, and reliable payments system in the region that would facilitate more fund flows among investors and other business transactions.”
“This would promote interconnected capital markets that would help further lower funding costs for borrowers and better price discovery for investors,” Ricafort said.
Connecting with one another
Following successful phases since then, a comprehensive blueprint for connecting domestic IPS globally was announced in July 2024.
Project Nexus is designed to standardize the way domestic instant payment systems (IPS) connect with one another.
Rather than an IPS operator building custom connections for every new country it links to, only one connection to Nexus is needed, allowing the IPS to reach all other jurisdictions in the network.
In the 2024 announcement, BIS said the “first mover” jurisdictions would contribute the initial capital required to build and establish the Nexus platform and bring it to live operation.
BSP has yet to comment on the amount of the initial capital it has contributed.
BIS, touted as the central bank of central banks, earlier said the project has the capacity to connect 1.7 billion people globally.
