The European Central Bank (ECB) is advancing plans to integrate TIPS, the Target Instant Payment Settlement mechanism launched under the Eurosystem in 2018, with India’s Unified Payments Infrastructure (UPI).
This connection is being enabled through a partnership with the Nexus Global Payments network, which offers a multilateral payment system first developed by the Bank for International Settlements (BIS) Innovation Hub Centre in Singapore.
The ECB governing council has approved plans to “start the realisation phase for interlinking TIPS with UPI while in parallel completing the legal arrangements and technical implementation”, according to a statement.
Also on the agenda are plans to “continue exploring the feasibility of a potential connection to Nexus Global Payments while in parallel completing the necessary legal arrangements and agreements”, the statement continues.
Working alongside this initiative, the council commenced work to assess the feasibility of connecting TIPS with the Interbank Clearing Instant Payments system in Switzerland in September.
Interlinking TIPS with other fast payment systems like UPI will pave the way for “faster, cheaper and more transparent and inclusive cross-border payments”, according to the ECB, stating a long-term ambition to “extend this work to additional currency corridors”.
The ECB has been testing the feasibility of connecting different instant payment systems for a number of years, with the Eurosystem completing the first successful proof-of-concept for an integration with systems in Malaysia and Singapore in 2022.
This was followed two years later with exploratory work initiated in October 2024 to assess the technical and operational requirements for connecting TIPS with both India’s UPI system and the broader Nexus Global Payments network.
Nexus Global Payments will initially connect the fast payment systems of five Asian central banks: Bank Negara Malaysia, Bangko Sentral ng Pilipinas, the Monetary Authority of Singapore, the Bank of Thailand, and the Reserve Bank of India.
In July 2024, these five participating central banks agreed to establish the Nexus Scheme Organisation in Singapore to oversee the project’s implementation. The Eurosystem and Bank Indonesia currently serve as special observers to the initiative, having contributed to earlier development phases.
Source: https://www.fintechfutures.com/
