Directions: Read the passage carefully and answer the questions that follow.
The Reserve Bank of India (RBI) has joined “Project Nexus,” a multilateral international initiative to enhance cross-border payments by connecting multiple domestic instant payment systems (IPS) globally.
Nexus, conceptualised by the Innovation Hub of the Bank for International Settlements (BIS), aims to connect the IPSs of four ASEAN countries — Malaysia, Philippines, Singapore, and Thailand — and India, who would be the founding members and first mover countries of this platform.
An agreement to this effect was signed by the BIS and the central banks of the founding countries i.e., Bank Negara Malaysia (BNM), Bank of Thailand (BOT), Bangko Sentral ng Pilipinas (BSP), Monetary Authority of Singapore (MAS), and RBI on 30 June 2024, in Basel, Switzerland.
BIS will facilitate central banks and IPS operators of India, Malaysia, the Philippines, Singapore and Thailand as they work towards live implementation in the next phase, with the Bank of Indonesia as a special observer.
“The platform can be extended to more countries, going forward. The platform is expected to go live by 2026. Once functional, Nexus will play an important role in making retail cross-border payments efficient, faster, and more cost-effective,” RBI said.
The Central Bank noted that it has been collaborating bilaterally with various countries to link India’s IPS — the Unified Payments Interface (UPI), with their respective IPSs 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 Instant Payment Systems, a multilateral approach will provide further impetus to our efforts in expanding the international reach of Indian payment systems,” RBI said.
[Excerpt from Swarajyamag “What is Project Nexus by RBI?” Dated 02/07/24]
Q1: What is the main objective of Project Nexus?
(a) To develop new financial regulations
(b) To facilitate instant cross-border payments
(c) To launch a new global currency
(d) To create a centralized international bank
Ans: (b) To facilitate instant cross-border payments
Sol: The main objective of Project Nexus is to improve international money transfers by linking different local Instant Payment Systems (IPS) to facilitate instant cross-border payments.
Q2: Which organization initiated Project Nexus?
(a) Reserve Bank of India (RBI)
(b) International Monetary Fund (IMF)
(c) Bank for International Settlements (BIS) Innovation Hub
(d) World Bank
Ans: (c) Bank for International Settlements (BIS) Innovation Hub
Sol: Project Nexus was initiated by the Bank for International Settlements (BIS) Innovation Hub to enhance cross-border payment systems.
Q3: Which countries are the founding members of Project Nexus?
(a) India, Indonesia, Malaysia, Philippines, Singapore
(b) India, Malaysia, Philippines, Singapore, Thailand
(c) India, Japan, Philippines, Singapore, Thailand
(d) India, Malaysia, Indonesia, Philippines, Thailand
Ans: (b) India, Malaysia, Philippines, Singapore, Thailand
Sol: The founding members of Project Nexus are the Fast Payment Systems (FPSs) of India, Malaysia, Philippines, Singapore, and Thailand.
Q4: What is the key benefit of Project Nexus in terms of payment processing?
(a) Payments are completed in less than 60 minutes
(b) Payments are completed in less than 60 seconds
(c) Payments are completed in less than 24 hours
(d) Payments are completed in less than 5 days
Ans: (b) Payments are completed in less than 60 seconds
Sol: One of the key benefits of Project Nexus is the ability to complete cross-border payments in less than 60 seconds.
Q5: How does Project Nexus simplify the process of linking Fast Payment Systems (FPSs)?
(a) By creating a new currency for all transactions
(b) By requiring unique links between each country's FPS
(c) By standardizing the connectivity methods to a single platform
(d) By centralizing all FPSs into one global system
Ans: (c) By standardizing the connectivity methods to a single platform
Sol: Project Nexus simplifies the process by standardizing the connectivity methods for instant payments globally, requiring only one way to connect to the platform, thus reducing integration time and cost.
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