Global: BIS and Inter-American Development Bank Forge Alliance to Drive Innovation and Financial Inclusion in Latin America

BIS and Inter American Development Bank join forces to foster innovation and financial inclusion in Latin America
Share this article

The Bank for International Settlements (BIS) and the Inter-American Development Bank (IDB) have come together to spearhead innovation and promote financial inclusion in Latin America and the Caribbean. Their collaborative efforts aim to explore and develop technologies that can modernize the financial systems within the region.

Agustín Carstens, General Manager of BIS, and Ilan Goldfajn, President of IDB, formally agreed to boost regional cooperation and integration for the advancement of innovative financial technologies. This partnership was solidified during the High-Level Dialogue on the Development of Critical Financial Market Infrastructure, held in Santiago de Compostela, Spain. The event witnessed the presence of finance ministers and central bank governors from the region.

The inaugural joint venture between the two institutions will focus on Project FuSSE (Fully Scalable Settlement Engine).

The rapid expansion of the digital economy has created a surge in demand for financial services, leading to an influx of new customers, higher transaction volumes per user, and an urgent need for faster services. This increased demand places significant pressure on the systems currently employed by central banks and other financial market infrastructure operators.

Project FuSSE is geared towards designing and testing backend functionalities that can be adapted to various infrastructure types, enabling them to efficiently handle a continuously growing number of transactions. FuSSE aims to examine the scalability of systems across three dimensions: transaction volume, asset types, and the number of participants. The technology could potentially support payment systems, security settlement systems, or even central bank digital currencies.

During its initial phase, the project will present a proof-of-concept for a basic settlement mechanism. This mechanism will be built using a modular, flexible architecture that incorporates quantum-resistant cryptography. This modularity allows potential users to adopt the entire set of modules or select specific ones based on their needs. All software developed will be published and made accessible as open source, in line with the BIS Innovation Hub’s mission to develop public goods.

This collaborative endeavor will draw upon the expertise of both institutions, as well as contributions from central banks in the region who will be invited to join later. BIS brings extensive experience in technical experimentation and global reach, complemented by IDB’s knowledge of regional systems and their interactions, along with its tools for engaging key stakeholders in the region.

The agreement also outlines cooperation in terms of technical assistance and training for national and regional authorities in the technologies used in the project. Furthermore, it envisions a policy component to complement the technical work, leveraging IDB’s close ties with countries in the region.

Agustín Carstens expressed his enthusiasm for this partnership, highlighting the potential to enhance financial infrastructures collaboratively and create a more efficient financial system. He stressed the importance of working together to explore new use cases and develop innovative solutions.

Harnessing the power of new technologies is crucial in establishing a cohesive network of fast and efficient payment systems throughout the region, all while minimizing costs. This endeavor can play a pivotal role in promoting financial inclusion, enhancing regional integration, and reducing poverty across Latin America and the Caribbean. A secure market infrastructure is essential to support development, and this partnership aims to address these vital objectives.

Share this article

Ghana: Bank of Ghana Receives Alliance for Financial Inclusion Institutional Leadership Award 2023

Previous article

Africa: Equity Bank and Mastercard Forge a 10-Year Agreement to Enhance Payment Services for Consumers

Next article

You may also like


Comments are closed.

More in Global