ECB backs EU bank payment system plan

The European Central Bank (ECB) has welcomed an initiative by European banks to develop a rival payment system to challenge the dominance of Visa and Mastercard and the threat from Chinese and US BigTech firms.

Backed by twenty French and German banks, the The Pan European Payment System Initiative (PEPSI) would seek to handle all forms of cashless transactions.

In a speech to a central bank summit in Brussels, ECB board member Benoît Cœuré, said: "The Eurosystem welcomes the strategic initiative of a number of major European banks to create a true pan-European retail payment solution that has the potential to meet the vision of our strategy.

"The proposed solution would be based on the Sepa credit transfer instant (SCT Inst) scheme, which is in our view the correct approach as it is future-oriented, and it could capitalise from day one on existing powerful and sophisticated infrastructures, such as the Eurosystem’s TIPS."

He called on the banks to develop a clear roadmap "so that we can see tangible actions emerge soon" and hinted at public policy initiatives to drive private sector solutions, for example by imposing legislation obliging payment providers to adopt instant payments within a certain period if a critical mass has not been reached.

"For its part, the Eurosystem stands ready to provide additional technical assistance where useful and required," Cœuré added. "For example, we will analyse how we could support the search for solutions that ensure that SCT Inst-compliant clearing mechanisms can be fully integrated.

"Current private solutions for the clearing of instant payments still have not addressed interoperability issues in a satisfactory manner - this requires further analysis and action."

Cœuré also suggested that central banks should step up their research into the development of digital currencies as demand cash falls away.

"A central bank digital currency could ensure that citizens remain able to use central bank money even if cash is eventually no longer used," he commented. "A digital currency of this sort could take a variety of forms, the benefits and costs of which the ECB and other central banks are currently investigating, being mindful of their broader consequences on financial intermediation."

    Share Story:

Recent Stories

New Business Frontiers
FStech’s Mark Evans discusses the future of financial services with Liu Jianning of Huawei, covering the limitations that current thinking can impose, how financial institutions can embrace technology to be both agile and resilient, and making space for the organisation to focus on the job of creating innovative business models and on delivering business value for their customers.

The Future of Intelligent Finance
FStech Group Editor Mark Evans sits down with Jason Cao, President of Global Financial Services Business Unit, Enterprise BG at Huawei ahead of its Intelligent Finance Summit which was held on 3rd and 4th of June in Shanghai. This Q&A delves into key trends in digital transformation of the financial services industry as well as a look at how data, robotic infrastructure, intelligent storage and innovative technologies are shaping the future for FSIs.

Cracking down on fraud
In this webinar a panel of expert speakers explored the ways in which high-volume PSPs and FinTechs are preventing fraud while providing a seamless customer experience.