In a speech in Osijek, European Central Bank Executive Board member Piero Cipollone set out the Eurosystem’s approach to making cross-border retail payments cheaper, faster and less vulnerable to geopolitical fragmentation. He highlighted the expansion of the Single Euro Payments Area (SEPA) in the Western Balkans and framed the Eurosystem’s response around interlinking fast payment systems across borders, alongside exploring how a digital euro could support cross-border use cases while respecting third-country sovereignty. The speech pointed to persistent frictions in cross-border payments despite lower technology costs, citing an example where a EUR 5,000 transfer from Croatia to a Western Balkan economy outside SEPA can cost up to 12 times more than a comparable SEPA transfer. It also referenced global metrics showing that costs exceed 3% in nearly one-quarter of retail corridors and that one-third of retail cross-border payments took more than one business day to settle in 2024, with remittance costs to Western Balkan economies averaging 6.7% until recently. Cipollone warned that parallel payment infrastructures and the global scaling of US dollar-denominated stablecoins could intensify fragmentation and currency substitution risks, arguing that stablecoins need to be properly regulated in line with Financial Stability Board principles. On implementation, Montenegro, Albania and North Macedonia have joined SEPA, with payment service providers in those countries able to be operationally ready to offer SEPA transfers from 5 October 2025. Steps agreed by the ECB’s Governing Council in October 2024 include implementing cross-currency settlement within TARGET Instant Payment Settlement (TIPS) initially for the euro area, Sweden and Denmark, and developing a cross-currency settlement service to support exchanges between TIPS and other fast payment systems subject to compatible schemes and full compliance with Financial Action Task Force standards. Further work includes exploring a connection to the BIS-led Project Nexus, assessing the feasibility of a bilateral link with India’s Unified Payments Interface, and supporting a TIPS-based instant multi-currency platform in the Western Balkans led by Banca d’Italia. For the digital euro, Cipollone referred to draft legislation that would allow temporary access for non-euro area residents via European payment service providers, enable merchants outside the euro area to accept digital euro payments, and permit permanent access only under EU and central bank agreements, with gradual rollout and holding limits for users outside the euro area no higher than those for euro area residents.
European Central Bank 2025-04-01
European Central Bank outlines cross-border payments agenda covering SEPA expansion, TIPS interlinking and potential digital euro use in third countries
ECB Executive Board member Piero Cipollone detailed the Eurosystem's strategy to improve cross-border retail payments by expanding SEPA in the Western Balkans and linking fast payment systems. He stressed addressing cost and settlement time issues and regulating stablecoins to reduce fragmentation risks. Steps include cross-currency settlement within TIPS, exploring global payment system connections, and drafting digital euro legislation for cross-border transactions.