Daily Current Affairs : 3-July-2024

The Reserve Bank of India (RBI) has recently joined Project Nexus, an international initiative geared toward allowing instant cross-border retail payments. This project is designed to connect domestic Fast Payments Systems (FPS) from multiple countries, and India’s Unified Payments Interface (UPI) will play a significant role in this development.

What is Project Nexus?

Project Nexus is an international effort spearheaded by the Bank for International Settlements (BIS) Innovation Hub. Its primary goal is to standardize the connectivity among various Instant Payment Systems (IPS) across different countries. This will help simplify the process of cross-border payments, making transactions faster and more efficient.

The key feature of this initiative is its ability to facilitate instant transactions. With Project Nexus, cross-border payments will be completed in just 60 seconds, which is a major improvement compared to traditional methods that could take hours or even days.

India’s Role in Project Nexus

As part of this initiative, India’s UPI will be integrated with the FPSs of several countries, including:

  • Malaysia
  • The Philippines
  • Singapore
  • Thailand

This partnership will allow users in these countries to send and receive money in real time, directly linking their local payment systems with India’s UPI. This could also lead to future expansions to more countries, further promoting the growth of instant payments worldwide.

How Does Project Nexus Benefit Global Payments?

Project Nexus is expected to significantly improve the global payments landscape by:

  • Reducing transaction times: Cross-border payments will be completed in under 60 seconds.
  • Simplifying the process: Instead of managing separate connections with each country, a single connection to the Nexus platform can link users to all participating countries.
  • Promoting financial inclusion: Faster and cheaper cross-border payments can help small businesses and individuals in various countries access global markets more easily.
Project Nexus: What You Should Know
Courtesy: UPSCprep.com

Important Points:

  • Project Nexus is an international initiative aimed at enabling instant cross-border retail payments.
  • The project connects domestic Fast Payments Systems (FPS) from multiple countries.
  • India’s UPI will be linked with FPSs in Malaysia, the Philippines, Singapore, and Thailand.
  • The project aims to standardize connectivity between different Instant Payment Systems (IPS) globally.
  • Cross-border payments will be completed in under 60 seconds, a significant improvement over traditional payment methods.
  • Single connection to Project Nexus links users to all participating countries, simplifying the process.
  • Future expansions could include additional countries, further enhancing global instant payments.
  • Key benefits include reduced transaction times, simplified payment processes, and promoted financial inclusion.
  • Small businesses and individuals in various countries will gain easier access to global markets.

Why In News

The Reserve Bank of India (RBI) has joined Project Nexus, an international initiative aimed at enabling instant cross-border retail payments by linking domestic Fast Payments Systems (FPSs) of multiple countries, facilitating faster, more efficient transactions between participating nations. This collaboration marks a significant step toward streamlining global payments and promoting financial inclusion.

MCQs about Project Nexus

  1. What is the primary goal of Project Nexus?
    A. To standardize internet banking systems
    B. To enable instant cross-border retail payments
    C. To create a global cryptocurrency
    D. To regulate national banking policies
    Correct Answer: B. To enable instant cross-border retail payments
    Explanation: Project Nexus aims to link domestic Fast Payments Systems (FPSs) from multiple countries to enable faster and more efficient cross-border payments.
  2. Which payment system from India is being integrated into Project Nexus?
    A. National Electronic Funds Transfer (NEFT)
    B. Immediate Payment Service (IMPS)
    C. Unified Payments Interface (UPI)
    D. Real Time Gross Settlement (RTGS)
    Correct Answer: C. Unified Payments Interface (UPI)
    Explanation: India’s Unified Payments Interface (UPI) is being integrated into Project Nexus to connect with Fast Payment Systems in other countries.
  3. How long will it take to complete cross-border payments under Project Nexus?
    A. 1 hour
    B. 60 seconds
    C. 1 day
    D. 3 days
    Correct Answer: B. 60 seconds
    Explanation: Project Nexus enables cross-border payments to be completed in under 60 seconds, significantly speeding up the transaction process.
  4. Which of the following countries will be linked with India’s UPI through Project Nexus?
    A. Australia, Japan, and the USA
    B. Malaysia, the Philippines, Singapore, and Thailand
    C. Canada, Mexico, and Brazil
    D. South Korea, China, and Indonesia
    Correct Answer: B. Malaysia, the Philippines, Singapore, and Thailand
    Explanation: India’s UPI will be connected with the FPSs of Malaysia, the Philippines, Singapore, and Thailand, with potential expansion to more countries.

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