ECB says its payment system better than Blockchain
Bank is getting ready to launch facility, known as TIPS, in November
FRANKFURT: The technology behind cryptocurrencies has been hyped as making payments fast, and secure and easy. European Central Bank (ECB) executive board member Yves Mersch says he can do even better.
The ECB is getting ready to launch its new settlement system, known as TIPS, in November.
Policymakers have urged banks previously to implement the technology – which will allow transactions to be conducted in real time – in order to provide an alternative narrative to the seeming innovation brought by the distributive ledger technology (DLT) of virtual currencies.
“TIPS is 10 seconds, 0.2 cents. DLT transactions are at best 30 euros and take at least one hour,” Mersch said in an interview. “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.”
The ECB this week held a conference on the new settlement technology – called TARGET Instant Payment Settlement – that garnered rather more excitement than might usually be the case regarding topics of financial plumbing.
Aside from bringing payments up to speed with other areas of a consumer’s life such as news or e-mails, immediate settlements are also seen as having economic benefits in the form of companies’ and people’s ability to make instant use of received money. Settlements in the euro area now take up to 24 hours.
Blockchain, meanwhile – the public transaction ledger behind Bitcoin and other cryptocurrencies – is often lauded for its cost-saving, decentralised, and automated qualities, as well as its speed. Banks such as Credit Suisse have said they embrace the technology even as they reject the digital currency it is linked to. “There are so many unsolved questions in terms of governance and legal certainty in DLT,” Mersch said. “We are looking to what extent we could overcome these legal barriers, but we are at a very early stage.”