The European Central Bank (ECB) has unveiled a new set of initiatives designed to enhance cross-currency instant payments within the European Union (EU) and potentially expand these capabilities globally.
Built on the Eurosystem’s TARGET Instant Payment Settlement (TIPS) service, this ambitious project supports the G20’s objective of creating a faster, cheaper, and more transparent global payments ecosystem.
Primary Initiatives
The ECB’s Governing Council approved two primary initiatives to improve cross-border payment efficiency and accessibility.
The first is the introduction of a cross-currency settlement service within TIPS, initially supporting the euro, Swedish krona, and Danish krone.
This capability will enable instant payments originating in one TIPS currency to be settled directly in another, providing immediate benefits for cross-border trade and personal remittances.
The ECB has also left the door open for additional currencies to be integrated into the TIPS system in the future, aiming to increase TIPS’ utility across Europe and beyond.
The second initiative involves exploratory efforts to link TIPS with other fast payment systems outside the EU, a move aimed at establishing seamless international payment channels.
If successful, this integration would allow TIPS to communicate and transact with other global fast-payment systems, helping to address some of the long-standing barriers to international transactions.
As the ECB works to enhance TIPS, the potential to extend cross-currency payments globally aligns with the Eurosystem’s broader retail payment strategy, which seeks to facilitate easy, fast, and secure payments across different jurisdictions.
Danmarks Nationalbank and Sweden’s Riksbank
Danmarks Nationalbank and Sweden’s Riksbank are prominent partners in this project, having actively participated in the development of the TIPS cross-currency payments system since 2020.
Both central banks hosted information sessions in October, engaging representatives from banks and payment providers.
The meetings underscored the benefits of real-time, cross-currency settlement for consumers and businesses, emphasising how this infrastructure will support economic connectivity within the region.
The project is a foundational component of the G20’s roadmap for global payment modernisation, striving to reduce transaction costs and settlement times and expand access to transparent, real-time payments across borders.
Erik Thedéen, Governor of the Riksbank, praised the collaboration for establishing a functional infrastructure for cross-currency payments that meets public demand and expands upon existing fast-payment solutions, such as Sweden’s RIX-INST system, which already settles Swish payments in real time.
With the project’s potential expansion to include non-EU currencies, the ECB’s cross-currency payment initiative is set to redefine international payment standards, bringing cost-effective, efficient, and accessible cross-border payments to the European and global stage.
This effort not only enhances the EU’s payment capabilities but also contributes to building a more interconnected and financially inclusive global economy.
For more information on the ECB’s initiatives, click here.
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