When we think of essential infrastructure, most of us picture the power lines, roads, airports and fiber-optic cables that make it possible for us to obtain goods and services.
But there is another, largely intangible infrastructure that is even more central to life in the 21st century: financial market infrastructures. They are often called ‘financial plumbing’ and, like their physical counterparts, operate silently in the background, and we only think about them if they stop working.
Among them, the so-called “settlement systems” consist of technological infrastructure, rules, and processes that enable the exchange of financial assets or securities between different parties. These systems are like the neural networks that allow modern economies to operate smoothly. Without them, people could not buy, sell, borrow or invest in seamless and secure ways.
Central banks typically oversee and operate these systems, ensuring that transactions are settled in a safe and orderly manner. These institutions are under constant pressure to modernize and upgrade their settlement infrastructure to ensure compatibility with evolving international standards, fast-changing e-commerce protocols and innovations such as cryptocurrencies and digital payment platforms.
To help central banks in Latin America and the Caribbean to stay ahead of these challenges, the Bank for International Settlements and the Inter-American Development Bank recently signed an agreement to support the modernization of the region’s financial system and foster greater financial inclusion. Within this collaboration, the first project is to develop a Fully Scalable Settlement Engine (FuSSE) to serve as a back-end system that can enable multiple infrastructure implementations, from payments and securities settlement systems to digital currency architectures.

What are the innovative aspects in the design and implementation of the FuSSE?
1. FuSSE will offer a “common language” for Central Banks in the form of basic technical building blocks, offering a reference framework that reduces the frictions associated with building systems collaboratively.
By using a modular and iterative approach, FuSSE will produce timely and tailored functionality and allow for multiple feedback opportunities. FuSSE is a large-scale project composed of smaller modules with scalability features and higher operational efficiency if compared to traditional infrastructures. This modular architecture allows for flexibility in implementation, as countries can choose to use different modules for their specific needs. While one country may implement the full settlement functionality, another may just want to use the cryptographic capabilities. This flexibility gives FuSSE a more comprehensive range of potential applications.
2. FuSSE will deploy continuous capacity building as the project evolves, including regular workshops and training sessions for interested parties.
Through the BIS – IDB agreement, representatives from participating institutions will have multiple opportunities to “learn by doing” through both structured and unstructured training sessions and workshops on the technologies used in the project, and through the creation of a community of users with frequent engagement.
3. The FuSSE project will aim to become self-sustaining over time, by assembling a community of beneficiary institutions that will contribute to the evolution of the product in an open-source context.
The product will be made available to interested institutions in an environment allowing for joint development and collaboration, with a view to fostering a community of institutions and individuals that have the skills to maintain and develop additional functionality according to the evolution of technology and changes in demand.
In this way, FuSSE will enable the perpetual finetuning and adaptation of the open-source code depending on the needs of different countries. While each will advance at their own pace, all will be speaking the same language and accessing the same modular building blocks and technology. FuSSE will be a truly regional—and potentially global—public good, with tremendous potential for the harmonization of standards across processes and outcomes.

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