The ECB has announced that it will investigate how TARGET Instant Payment Settlement (TIPS) could support instant payments transactions across different currencies. The investigation will begin as of October 2020 in collaboration with Sveriges Riksbank.
ECB proposes cross-currency instant payments pilot
TIPS settles payments in central bank money in real time and around the clock. It currently supports the settlement of instant payments in euro, but also has the functional capability to support other currencies. TIPS will start to settle instant payments in Swedish kronor as of May 2022.
The ECB and Sveriges Riksbank will explore possible ways of enabling the TIPS platform to process cross-currency payments between euro and Swedish kronor.
In practical terms, this would enable a Swedish consumer to transfer funds in kronor to a retailer in any euro area country, with the payment received in euro in a matter of seconds. A customer in the euro area could transfer euro in payment for goods in Sweden in the same way.
Other countries, with other currencies, that join the TIPS platform could also benefit from a cross-currency instant payment capability.
This initiative, which would further reinforce the strong cooperation that exists between central banks in Europe, comes as a response to the increasing consumer and business needs that stem from the growth of cross-border e-commerce, tourism and migration flows.
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