In the realm of cross-border payments, distributed-ledger technology (DLT) has long been seen as a game changer, poised to transform the industry and supplant the dominant Swift-based correspondent banking system. Yet, despite the initial hype, DLT has faced obstacles in terms of scalability and the tedious process of forging bilateral connections between all involved parties.
Mamerto Tangonan, deputy governor and head of the payments and currency management sector at the Bangko Sentral ng Pilipinas (BSP), believes that southeast Asia's Nexus project could offer a viable alternative for faster, cheaper and more transparent cross-border payments.
"The innovation here lies more in the arrangement than the technology," Tangonan tells Euromoney, “as it utilizes existing global standards like ISO 20022 for messaging and APIs for system communication. The real innovation is in the arrangement itself.”
The innovation lies more in the arrangement than the technology
Although the Philippines was not an initial member of the project's first phase, the country is optimistic after participating in follow-on development. In March 2023, the Bank for International Settlements (BIS) announced the successful connection of test versions of three instant payment systems using the Nexus model, linking the eurozone's Target Instant Payment Settlement, Malaysia's Real-time Retail Payments Platform, and Singapore's Fast and Secure Transfers.
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