The Bank for International Settlements (BIS) Innovation Hub Singapore – Centre and partners announced that it has successfully connected test versions of three established Instant Payment Systems (IPS) using the Nexus model. The company also outlined the next phase in the project, which is to work on the real-world potential of a multilateral network that can be scaled up across more countries.
The year-long collaboration included the Bank of Italy, Central Bank of Malaysia (BNM), and Monetary Authority of Singapore (MAS), plus the payment systems operators PayNet and Banking Computer Services (BCS).
In a press release, BIS stated that the test payments were initiated using only the mobile phone numbers or the recipients’ company registration numbers via 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.
For the next phase of the project – in line with their November 2022 Memorandum of Understanding on Cooperation in Regional Payment Connectivity – Bank Indonesia, BNM, Bangko Sentral ng Pilipinas (BSP), MAS, and the Bank of Thailand will leverage experiences from Phase I and Phase II of the project towards connecting their countries’ IPS and facilitate cross-border transactions across a combined population of about 500 million people.
The Innovation Hub’s Singapore Centre will collaborate with these central banks to facilitate their design processes, as they aim to connect their domestic payment systems.
Harnessing the potential of multilateral connectivity, fast payment systems
“I am thrilled at our success in connecting three national payment systems and the potential this indicates for Nexus,” said Cecilia Skingsley, Head of the BIS Innovation Hub, in a press release. “It paves the way for further development and we are looking forward to collaborating with our partner central banks on the next phase of the project.”
For his part, BSP Governor Felipe M. Medalla said, “We congratulate the BIS Innovation Hub Singapore Centre and its partners from Italy, Malaysia, and Singapore for the successful completion of the Project Nexus Proof-of-Concept. The second phase has enabled us to harness the potential of multilateral connectivity of fast payment systems among the first-mover countries in the ASEAN. Building on this momentum, we look forward to working with BIS and our counterparts in the ASEAN in the enhancement of cross-border real-time retail payments that can facilitate financial integration within the region.”
“With an expanding digital sector and remittances remaining to be important drivers of growth, the Philippines remains committed to its pursuit of necessary reforms for a more seamless global payments landscape. We believe this project is a concrete step in this direction,” he added.
Looking ahead, the BIS and the five central banks envisage that Nexus could eventually be implemented globally. To achieve this, they will aim to establish a Global Advisory Panel of central banks and payment system operators to advise on the project’s development beyond the Southeast Asian region. The Bank of Italy and the European Central Bank will be invited to join this panel.
The BIS also plans to run a webinar on the Nexus proof of concept on April 5, 2023.
BIS project to ensure multilateral interlinking of payment systems
The Nexus report, published earlier this week, details the early experiments and technical specifications for the multilateral interlinking of payment systems.
The experiment’s success paves the way for the BIS Innovation Hub Singapore Centre to explore the practical applications of a distributed multilateral network.
Nexus aims to support the priorities of G20 (Group of 20), which include improving the cost, speed, and access, as well as transparency of cross-border payments by connecting domestic IPS across multiple countries through a standardized and multilateral approach. It is designed to accommodate differences between IPS, rather than trying to homogenize them.
Established in 1930, the BIS is currently the oldest international financial institution. From its inception to the present day, the international financial institution has played critical roles in the global economy, from settling reparation payments imposed on Germany following the First World War, to serving central banks in their pursuit of monetary and financial stability.