Central bank cooperation and instant payments

Abstract icon Central banks continue cooperation to improve instant cross-border payments across multiple currencies.

  • The European Central Bank (ECB) and Sveriges Riksbank have decided to continue a project which has been joined by Danmarks Nationalbank. The aim of the project is to examine whether the ECB's TARGET Instant Payment Settlement (TIPS) platform can be expanded to settle instant payments across the connected currencies.
  • If the new functionality is put into use, payments initiated in Danish kroner by the payer can be received instantly in Swedish kronor or euro by the payee (person or business).
  • As announced on 16 December 2020, Danmarks Nationalbank is working on a project to migrate the settlement of Danish kroner to the European payment and securities settlement platform, Target Services, including to TIPS, in 2024-25.

The initiative supports the strategic objective of improving cross-border payments to strengthen the ability of European businesses and individuals to send and receive payments within the EU and in and out of the EU.  

The success of the project, if realised, depends, among other things, on how many currencies join TIPS. Sveriges Riksbank expects to join in May 2022, while Danmarks Nationalbank is looking to join in 2024-25. Read more here.  

Today, consumers and businesses often face high costs when initiating or receiving payments to or from countries with different currencies. For example, Danish tourists currently pay a currency conversion fee of 1.5 per cent of the transaction value when using their debit or credit card at European payees. For overseas payments, the fee is 2.0 per cent of the transaction value. In 2019, physical card payments abroad totalled approximately DKK 33 billion.

Danmarks Nationalbank is looking forward to continuing the cooperation in the hope that an attractive alternative to the current payment methods can be found. Among other things, this depends on whether an effective TIPS exchange facility can be successfully introduced to improve the ability to perform cross-currency payments like we can today with payment cards. To enable the use of instant payments as an alternative to card payments, work is also under way to make the procedures for anti-money laundering checks etc. more efficient.