The end of the American Dream...
- India imports a significant amount of crude oil from the UAE, often using US dollars for payment.
- Reliance on the dollar exposes both countries to currency fluctuations and transaction costs.
- To reduce dependence on the dollar and promote their currencies, India and the UAE signed a Memorandum of Understanding (MoU) in July 2022.
Project Nexus is a collaborative initiative led by the Bank for International Settlements (BIS) Innovation Hub, aiming to interconnect domestic instant payment systems (IPS) across countries to facilitate seamless, real-time cross-border retail payments.(Bank for International Settlements)
ЁЯМР Participating Countries
The founding members of Project Nexus include:(Reuters)
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India
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Singapore
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Malaysia
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Thailand
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Philippines(Swarajyamag, ASEAN Briefing, Reuters)
Additionally, Indonesia is participating as a special observer. (Reuters)
ЁЯФЧ Objective
Project Nexus aims to:(The Hindu Business Line)
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Connect each country's instant digital payment systems (e.g., India's UPI and Singapore's PayNow)
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Enable instant, low-cost cross-border payments
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Reduce reliance on traditional payment networks(Reuters)
This initiative is expected to benefit a combined market of 1.7 billion people by allowing them to make instant payments across borders easily and cheaply. (Reuters)
ЁЯПв Nexus Global Payments (NGP)
To operationalize Project Nexus, the participating central banks have established Nexus Global Payments (NGP), a not-for-profit entity incorporated in Singapore. NGP will manage the multilateral instant cross-border payments scheme and oversee the technical implementation. (Bot)
ЁЯУЕ Timeline
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June 30, 2024: Agreement signed by BIS and the central banks of the founding countries in Basel, Switzerland.
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By 2026: The platform is expected to go live, enabling real-time cross-border retail payments among the participating countries. (The Hindu, The Hindu Business Line)
ЁЯЗоЁЯЗ│ India's Role
India's participation through the Reserve Bank of India (RBI) and its Unified Payments Interface (UPI) is pivotal, given UPI's widespread adoption domestically. The RBI has been actively working to link UPI with other countries' payment systems, and Project Nexus represents a significant step towards multilateral connectivity. (ASEAN Briefing)
ЁЯЗ╕ЁЯЗм Singapore's Role
Singapore's Monetary Authority of Singapore (MAS) is a key participant, with its PayNow system already integrated with India's UPI. This existing linkage facilitates instant person-to-person and person-to-merchant transactions between the two countries, laying the groundwork for broader multilateral integration under Project Nexus. (Wikipedia)
ЁЯФо Future Prospects
Project Nexus is designed to be scalable, with the potential to include more countries over time. The BIS will continue to play an advisory role as the project progresses towards live implementation. (The Times of India, Bank for International Settlements)
Watch...
This agreement, in place since 1974, required Saudi Arabia to sell oil exclusively in US dollars. This created a constant demand for dollars worldwide, solidifying its status as the world's reserve currency.
By letting the deal expire, Saudi Arabia gains the flexibility to trade oil in other currencies like the Euro, Yuan, or even potentially digital currencies. This could lead to a major shift away from the petrodollar system and the US dollar's dominance in international trade.
It's a story worth following to see how it affects the global economy.
Wake up... humans of Bharat... sense what is going around...
And the latest news of Bharat - we have urged our FTA nations to deal in local currencies.
