Bank Indonesia (BI) has partnered with four central banks of ASEAN member states to collaborate on a fast payment system connectivity in the region. The four central banks include Bank Negara Malaysia (BNM), Bangko Sentral ng Pilipinas (BSP), Monetary Authority of Singapore (MAS), and Bank of Thailand (BOT). Then, what is the real purpose of this collaboration?
ASEAN’s five central banks have also collaborated with the Bank for International Settlements (BIS) to explore the potential of fast payment-based payment connectivity in the region through the implementation of the Nexus Project.
The Nexus Project in its initial stage is a study conducted by BIS to create a multilateral scheme for connecting payment systems in various countries. In the second stage, BIS, BNM, MAS, and Banca d’Italia conducted a technical study and testing of payment connectivity based on fast payment.
In the third stage, which is currently underway, BI, along with BIS, BNM, BSP, MAS, and BOT, will conduct a study and in-depth analysis of the potential of connectivity, including organizational and governance schemes, business models and commercial adoption, as well as technology and operations.
Phase III is planned to be carried out from April 2023 to March 2024. BI Governor Perry Warjiyo said that BI’s involvement in the Nexus Project is one implementation of the memorandum of understanding on payment connectivity cooperation in the G20 Summit in November 2022.
This cooperation scope is also one of the priority agendas of the Indonesian Financial Chairmanship’s financial path in ASEAN 2023. With the in-depth analysis through the Nexus Project in this phase, it is expected that cross-border payment system connectivity can be realized to promote cheaper, easier, safer, more inclusive, and transparent cross-border transactions.
Other benefits include access to cross-border payment systems that can reach micro, small and medium-sized enterprises (MSMEs), facilitating remittances, including for Indonesian migrant workers (PMI), as well as making transactions easier for tourists.
BI, together with other central banks in the region, has previously agreed on a cross-border QR code-based payment collaboration. On August 29, 2022, BI and BOT agreed to implement cross-border QR code-based payment collaboration. At the same time, a similar initiative was agreed upon between Indonesia and Singapore.
Meanwhile, with BNM, a trial interconnection of cross-border payments using QR codes between Indonesia and Malaysia was launched on January 27, 2022.
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