But will the big banks play along?
On Friday the ECB launched, with minimal fanfare, a brand new system aimed at enabling banks to settle payments instantaneously across Europe, helping them to compete with PayPal and other global tech giants. Developed in little over a year, the ECB’s not-for-profit TARGET Instant Payment Settlement (TIPS) system will let people and businesses in Europe transfer euros to each other almost instantly, at extremely low cost, and irrespective of the opening hours of their local bank.
The first ever payment via TIPS took place on Friday between a customer of Spain’s CaixaBank and one of French bank Natixis. The payment went through in a matter of seconds.
“In launching TIPS, the Eurosystem is acknowledging the changing reality that digitization is erasing the borders between wholesale and retail,” said ECB Executive Board Member Yves Mersch at the TIPS launch event, in Rome. Mersch was one of the senior European central bankers who oversaw the new payment system’s roll out, work on which began in June 2017.
Earlier this year he bragged to Bloomberg that the new system would leave blockchain in the dust. “TIPS is 10 seconds, 0.2 cents. DLT transactions are at best 30 euros and take at least one hour,” Mersch said. “We have a mandate for efficient payment systems, and we go for efficiency. We are not bound to a technology, we are bound to results”…