Response to Facebook Libra? EU Banks Can Deploy Payment System By 2020

All banks in the eurozone could share the instant payment system at the end of 2020, as reported by Reuters on 26 June.

The real time payments are available since 2017. However, only half of the banks in the eurozone have adopted the technology and it is mainly used for domestic payments. Now, the adoption on payment systems may speed up due to the threat from competitors such as Facebook that use cryptocurrencies to facilitate seamless payments across their global users.

Director general of the European Payments Council (EPC), Etienne Goosse commented on the impact of Facebook Libra “They come with a global solution, under a global brand offering many things that the consumers seem to find wonderful.” Goosse added that instant payments are being adopted by 60% of lenders and payment service providers within the eurozone, and it is expected to reach to all banks in the bloc by the end of 2020.

The European Central Bank launched the TARGET Instant Payment Settlement (TIPS) in November 2018, which enables real-time transaction mitigating fragmentation risks in the European retail payments market. However, it is argued that these mechanisms are not interoperable among lenders that are not members of the same clearinghouse, and each of these systems that cover only a few dozen banks.

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