The European Central Bank (ECB) has unveiled new initiatives to enhance cross-border payments, building on its existing TARGET Instant Payment Settlement (TIPS) service.
These initiatives aim to create faster, more accessible, and transparent global payment networks, improving how consumers and businesses within and outside the European Union (EU) transact.
The ECB’s move aligns with the G20 roadmap, which seeks to establish a global payments ecosystem that is not only faster and cheaper but also more transparent and secure.
By improving cross-border payments, the Eurosystem’s initiatives contribute to this global vision while also advancing Europe’s retail payments strategy.
This strategy is aimed at making it easier for European consumers and businesses to make payments with partners outside the euro area, reducing the friction often associated with international transactions.
Cross-Currency Settlements in TIPS
A key component of the ECB’s plan is the introduction of a cross-currency settlement service within TIPS.
This service will allow instant payments to be settled in different currencies, including the euro, Swedish krona, and Danish krone, all in central bank money.
This feature will enable faster and more secure transactions across borders, reducing the need for intermediary banks and lowering transaction costs.
The TIPS cross-currency settlement service represents a major milestone in improving Europe’s payment infrastructure.
It will help facilitate real-time, cross-border payments in multiple currencies, creating a more seamless experience for businesses and consumers alike.
Initially, the service will support three currencies, but the ECB plans to expand it further, eventually integrating more currencies from other regions.
Linking TIPS with Global Payment Systems
Another significant development is the ECB’s exploratory work to link TIPS with other fast payment systems around the world.
This initiative will not only improve cross-border payments within the EU but will also extend to global partners, enhancing international trade and financial collaboration.
As part of this effort, the ECB will join Project Nexus, an initiative led by the Bank for International Settlements (BIS) to connect real-time payment networks across borders.
Project Nexus has already seen successful pilot programs with Malaysia and Singapore and is now working with countries like Indonesia, the Philippines, and Thailand to bring this global payment integration to life.
The ECB’s decision to join Project Nexus will accelerate the global adoption of instant payment networks, using ISO 20022 messaging standards and purpose-built APIs to create a streamlined, efficient cross-border payment system.
By interlinking fast payment systems and introducing cross-currency settlements, the ECB’s initiatives mark a significant leap forward in transforming cross-border payments, ensuring they are faster, cheaper, and more secure for consumers and businesses worldwide.
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