The Bank for International Settlements (BIS) and the Inter-American Development Bank (IDB) are joining forces to foster innovation and financial inclusion in Latin America and the Caribbean by exploring and developing technology that can help to modernise the region's financial systems. 

The BIS General Manager Agustín Carstens and the IDB President Ilan Goldfajn today agreed to foster regional cooperation and integration to develop innovative technologies for the financial sector. The agreement was signed during the High-Level Dialogue on the Development of Critical Financial Market Infrastructure at Santiago de Compostela, Spain, in the presence of finance ministers and central bank governors from the region. 

The first collaboration between the two institutions will be on Project FuSSE (Fully Scalable Settlement Engine, pronounced as fyooz). 

The deepening of the digital economy has increased the demand for financial services, with new customers, more transactions per user and a need for faster services. This surge in demand puts pressure on the systems currently used by central banks and other financial market infrastructure operators. 

Project FuSSE aims to design and test backend functionality that can be adapted to multiple types of infrastructures, allowing them to process a continuously growing number of transactions. FuSSE aims 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, security settlement systems or even central bank digital currencies. 

In its first phase, the project will deliver a proof-of-concept for a basic settlement mechanism. This will be developed as a modular flexible architecture incorporating quantum-resistant cryptography. The modularity allows potential users to adopt the complete set or any subset of modules for their specific purposes. All the software developed will be published and made available on an open source basis to the global central bank community, fulfilling the BIS Innovation Hub's mission of developing public goods. 

This joint project will benefit from the expertise of each institution as well as from central banks in the region that will be invited to join later. The BIS's experience in technical experimentation and its global scope is complemented by the IDB's knowledge of the regional systems and their interactions, as well as its tools for reaching out to the region's relevant players.

The agreement also foresees cooperation on technical assistance and training for national and regional authorities in the technologies used in the project and also envisages a policy dimension to complement the technical work, drawing on the IDB's closer relationship with countries in the region.