Introduction and About Project Nexus

  • Project Nexus is a groundbreaking initiative launched by the Bank for International Settlements

(BIS), aimed at designing a global platform for cross-border payments.

  • This initiative is a product of the joint efforts of the BIS, numerous central banks, and financial institutions aimed at building a standardised global payment platform.
  • The project aims to enhance the efficiency and security of international money transfers.

Why is RBI’s Involvement in Project Nexus Significant?

  • The Reserve Bank of India's (RBI) participation in Project Nexus can potentially revolutionise how we understand and execute cross-border payments as it significantly contributes to streamlining and strengthening the global payment system.
  • This move from RBI places India in a pivotal position regarding global payment reforms.

Benefits of Project Nexus

  • Standardisation: Project Nexus will simplify the way Instant Payment Systems (IPS) interconnect.
  • Single Connection: It enables payment system providers to reach all other network countries without the need for individual tailor-made connections.
  • Instant Payments: The project framework allows international payments to be made from the sender to the recipient within 60 seconds in most scenarios.
  • Cost Efficiency: Charges for sending and receiving payments are almost nil, making the system highly cost-effective.
  • Growth Acceleration: The existing instant payment systems can leverage Project Nexus to expedite the growth of instant cross-border payments.

Bank for International Settlements (BIS)

  • The BIS, launched in 1930, is owned by 63 central banks that together account for around 95% of the world's GDP.
  • It primarily functions from Basel, Switzerland, and operates representative offices in Hong Kong SAR and Mexico City, along with Innovation Hub Centers across the globe.
  • BIS's medium-term strategy, known as Innovation BIS 2025, utilises technology and new collaboration mediums to serve the central banking community in this rapidly evolving world.
  • The organisation serves central banks by providing a platform for communication and international cooperation, delivering deep analysis and insights on key policy issues, and offering sound and competitive financial services.
  • The global banking guidelines, known as Basel Banking Accords, set by the Basel Committee on Banking Supervision (BCBS) under BIS provide guidelines for the best banking practices.

Significance in Current Affairs and General Knowledge

  • Knowledge of Project Nexus and RBI's involvement is vital for those preparing for government exams since it directly ties with financial systems and banking sectors.
  • Understanding about the Bank for International Settlements (BIS) is vital as it offers insights into the functioning of global banking systems and international cooperation in banking.
  • The details about the Basel Banking Accords are also useful for banking sector-related exams and interview preparations.