The Bank for International Settlements and the IDB promote financial inclusion in Latin America

Through the exploration and development of technologies that can contribute to modernizing the region's financial systems, the Bank for International Settlements (BIS) and the IDB join forces to promote innovation and financial inclusion in Latin America and the Caribbean

The general director of the BPI, Agustín Carstens, and the president of the IDB, Ilan Goldfajn, were responsible for signing this agreement last Thursday to strengthen regional cooperation and integration to develop innovative technologies for the financial sector.

The text was signed during the High Level Dialogue on the Development of Critical Infrastructures for Financial Markets held in Santiago de Compostela, Spain, in the presence of Finance Ministers and Governors of central banks in the region.

The first collaboration between both institutions will focus on the FuSSE Project (Fully Scalable Settlement Engine in English). This initiative seeks to design and test ‘backend’ functionalities that can adapt to multiple types of infrastructures, allowing them to process a continually growing number of transactions.

Its goal is to test highly scalable systems in three dimensions: the number of transactions, the types of assets and the number of participants. The technology could support payment systems, securities settlement systems or even central bank digital currencies.

Flexible modular architecture

In its first phase, the project will create a proof of concept of a basic settlement mechanism that will be developed as a flexible modular architecture incorporating quantum-resistant cryptography.

Modularity will allow implementing countries to adopt the full set or any subset of modules for their specific purposes. All software developed will be published and made available to the global central banking community in open source, fulfilling the BIS Innovation Center’s mission to develop public goods.

This joint project will benefit from the comparative advantages of each institution, as well as the central banks in the region that will be invited to join later. The BIS’s experience in technical experimentation and its global reach are complemented by the IDB’s knowledge of regional systems and their interactions, and its tools for reaching relevant actors in the region.

The agreement also provides for cooperation in terms of technical assistance and training for national and regional authorities in the technologies used in the project, as well as a political dimension that complements the technical work, taking advantage of the IDB’s closer relationship with the countries of the region.

The president of the BIS, Agustín Carstens, has been “enormously” pleased to begin this collaboration, which adds the complementary competencies and strengths of the BIS and the IDB. “Creating a community with the region’s central banks to develop the FuSSE Project has the potential to improve these infrastructures and make the entire financial system work better,” he highlighted.

For his part, the president of the IDB has stated that this initiative will help promote financial inclusion, provide regional integration and reduce poverty in Latin America and the Caribbean.”

Source: dpa

(Referential image source: IDB, Europa Press / dpa)

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