Which one among the following statements about Project Nexus is correct?

Question

Question

This question was previously asked in

UPSC CDS-I 2025 (General Studies) Official Paper (Held On: 13 Apr, 2025)

It is an international agreement to enable labour movement between countries.
It is an international initiative to enable instant cross-border retail payments.
It is an international initiative to transfer technology between countries.
It is an international agreement to create database on financial inclusion.

Answer 1

The correct answer is It is an international initiative to enable instant cross-border retail payments.

Key Points

Project Nexus is spearheaded by the Bank for International Settlements (BIS) Innovation Hub to enable instant cross-border retail payments.
It aims to establish interlinkages between national payment systems to facilitate faster and low-cost international transactions.
The project focuses on creating a unified technical blueprint for connecting domestic payment systems globally.
Project Nexus leverages existing fast payment systems (FPS) in participating countries to reduce reliance on traditional correspondent banking networks.
The initiative seeks to enhance financial inclusion by simplifying cross-border payments for individuals and small businesses.

Additional Information

Fast Payment Systems (FPS):
- FPS are domestic systems that enable real-time transfer of funds between individuals and businesses.
- Examples include India's Unified Payments Interface (UPI) and Brazil's Pix system.
- Project Nexus seeks to connect such systems internationally for seamless cross-border payments.
Cross-Border Payments:
- These are transactions where the payer and payee are located in different countries.
- Traditional methods often rely on SWIFT and correspondent banking networks, which can be costly and slow.
- Project Nexus addresses these issues by leveraging FPS and reducing intermediaries.
BIS Innovation Hub:
- The BIS Innovation Hub focuses on fostering international collaboration to explore technological solutions for financial stability.
- It is involved in projects like CBDCs (Central Bank Digital Currencies) and improving payment infrastructures.
Financial Inclusion:
- Financial inclusion refers to providing affordable and accessible financial services to all individuals, particularly underserved populations.
- By facilitating low-cost cross-border transactions, Project Nexus aims to bridge gaps in access to financial services.