IDB and BIS Will Support Financial Infrastructures to Advance Inclusion in Latin America and the Caribbean

• FuSSE is the first project developed under the agreement signed between the IDB and the BIS in 2023 to promote regional financial inclusion.
• This initiative by the IDB and the BIS, with the participation of the Bank of Canada, has generated broad regional interest.
• The initiative has a three-pronged approach to financial inclusion in the region: technological innovation, assistance for the design and implementation of public policy, and institutional capacity building.

The Inter-American Development Bank (IDB) and the Bank for International Settlements (BIS) presented the latest advances of the Fully Scalable Settlement Engine, or FuSSE, an initiative that offers open-source technology among central banks to facilitate the implementation of payment systems and other settlement infrastructures. It will also provide technical assistance for regulatory design and institutional capacity improvement.

The presentation of FuSSE's progress and the official start of technical cooperation between both entities took place this week in Washington, D.C., in a meeting attended by the president of the IDB, Ilan Goldfajn, the BIS general manager, Agustín Carstens, and the governors of central banks from Chile, Colombia and Uruguay. FuSSE is the first project developed under the memorandum of understanding signed by both entities in 2023. To date, this initiative, which also involves the Bank of Canada, has generated broad interest among countries in the region.

To advance financial inclusion in Latin America and the Caribbean, countries need to remove barriers to entry for consumers and make personalized products and services more convenient and accessible. FuSSE is committed to facilitating this access through simplifying the implementation of efficient payment systems and other settlement infrastructures necessary for the future of financial transactions. The initiative has a three-pronged approach to financial inclusion in the region: technological innovation; design and implementation of public policy; and institutional capacity building.

First, in the technology area, FuSSE will support the development of financial technology and market infrastructures to reduce the costs of implementing complex infrastructures, promote standardization, and create solid foundations on which additional elements can be built to integrate more advanced financial services. The modular architecture of the tool will give each central bank the flexibility to choose which elements to implement and the possibility to adapt the system's functions to local needs. To date, progress has been made in developing a basic infrastructure, including services such as scalable clearing and settlement, as well as cybersecurity modules equipped with quantum threat-resistant computing technology.

Second, the initiative will provide technical assistance in designing and implementing sound public policies, including a solid regulatory framework to enable fast and inclusive payment systems. Over the past year, the IDB has supported countries such as Colombia, Ecuador and Suriname by assessing their current payment infrastructures and providing recommendations.

Third, FuSSE will help develop and strengthen institutional capacity - the institutional architecture and talent central banks and other financial authorities need to effectively roll out instantaneous low-value payment systems.

"Research shows that regular use of financial services can help reduce poverty. That's why it is so important to help countries in the region develop their payment systems, which open the door to greater financial inclusion," IDB President Ilan Goldfajn said. "At the IDB, we will continue to build partnerships and intensify our work to empower financial consumers and ensure their long-term wellbeing."

President Goldfajn also highlighted the launch of FINLAC, a new initiative of the IDB Group to promote financial inclusion by ensuring that the most vulnerable people in Latin America and the Caribbean can access the financial services they need.

BIS General Manager Agustín Carstens said: "FuSSE is one of the many steps we need to take in the direction of building infrastructure and technologies to meet the extraordinary demands we are facing from society. It can help bridge some of the technology gaps among countries and contribute to solve the financial inclusion problem faced by some Latin American nations."
FuSSE will allow countries in the region to launch their own innovative and effective payment systems and other settlement infrastructures.

In this first phase of FuSSE, the IDB, with the BIS and the Bank of Canada, will focus on the architecture and development of FuSSE's basic technological platform as a regional public good. Simultaneously, the BIS and the IDB will form a community where central banks can exchange knowledge about technical aspects of the project, and about other relevant financial topics. Finally, the IDB will continue to support regulations and institutional capacity building in the region.

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