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Interview with Fiona van Echelpoel, ECB


TIPS is coming up to its one year anniversary, how is the platform progressing?

By Q1 2020 we expect that the majority of the Spanish, Belgian, Dutch and Austrian markets will be reachable by TIPS, as well as further German, Luxembourgish and French banks. National markets in the euro area make themselves reachable via TIPS as their roll-out of instant payments solutions progresses. TIPS was made available at a time when in many euro area markets instant payments were still at the planning/development stage.

Earlier this year, the EU Commission’s vice president in charge of financial services, Valdis Dombrovskis, raised the possibility of more concrete actions to push TIPS adoption, suggesting that a “regulatory push” might be needed. Will TIPS be forced on banks and is regulation really the right answer?

No one is forced – banks are free to participate in the clearing and settlement mechanism(s) (CSM(s)) of their choice. Instant payments is central to the future of the European payments market and TIPS is a service offered to the banks to facilitate pan-European reachability; it complements services provided by private automated clearing houses. We do however expect banks to guarantee that they are fully reachable across the Single Euro Payments Area (SEPA), in line with the spirit and the requirements of the SEPA Instant Credit Transfer: the participation in a CSM that only covers their national community cannot be considered enough. Full SEPA reachability means that a bank ensures that its customers can send and receive instant payments to/from consumers and companies across Europe irrespective of where they are located or where the payment is made, just like for SEPA direct debits and SEPA credit transfers today. This is the only way to gain the trust of consumers and businesses, and of exploiting the potential of instant payments.

TIPS is still not open to non-Eurozone currencies, when can we expect this to happen?

TIPS is designed as a multi-currency system which allows central banks to make their currency available for settlement should they wish to do so. This summer Sveriges Riksbank indicated their interest in bring the Swedish krona to TIPS in 2021.  TIPS is ready to onboard the Swedish krona should Riksbank finally decide to join.

Cross border instant payments is now an issue being tackled in various arenas. The ECB has been involved in Project Stella, can you tell our readers a little bit about this and how it is advancing?

Stella is a joint research project with the Bank of Japan that focuses on the possible use of distributed ledger technology (DLT) for financial market infrastructures. It is experimental work to better understand the potential benefits and challenges around new technologies and not geared towards replacing existing market infrastructure services. The third phase of the Stella project, which was completed in June 2019, examined how cross-border payments could potentially be improved by new technologies, especially in terms of safety It concludes that only payment methods with an enforcement mechanism, either through the ledger itself or through a third party, can ensure the safety of the principal amount of money being transferred.

The new consolidated Target platform will be launched in November 2021. What are the benefits the industry can expect from this?

The consolidated platform will feature a centralised tool that will allow participants to steer, manage and monitor central bank liquidity across all TARGET Services. The messaging standard ISO 20022 will be used, which is already the case for T2S and TIPS. Moreover the platform will offer a higher level of cyber resilience. Like TIPS and T2S the new RTGS will also be operated as a multi-currency system.

What else can we expect from the ECB over the next 12-18 months in the payments space?

We will continue facilitating innovation and integration in a truly single European payments market. To give an example, we see a strong need for progress in the development of pan-European payment solutions at points-of-interaction (POI). We are ready to foster credible market-led solutions should they emerge.

Fiona van Echelpoel, Deputy Director General, European Central Bank

Author: Kate Nelson