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Sweden's central bank, the Riksbank, has successfully completed the first phase of the migration to TARGET Instant Payment Settlement (TIPS), paving the way for the instant settlement of payments in Swedish kronor.
The central bank announced that it has launched the RIX-INST service, enabling payments between banks to be made in real-time 24/7 using central bank money.
The service is connected to Eurosystem payment platform TIPS, and makes Sweden the first non-euro area country to connect.
“The existing RIX system is designed for large-scale payments and has limited opening times. Like all the players in the payment market, the Riksbank needs to adapt to a future in which payment flows are increasingly fast,” said Mats Wallinder, deputy head of the payments department.
In its announcement, the Riksbank has touted the fact that it will now be sharing a platform with other central banks, meaning economies of scale and lower costs than if the Riksbank were to develop its own system.
In addition, Swedish companies will have the opportunity to develop new payment services on a common European platform.
The first phase included establishing a connection between the Swedish real-time gross settlement (RTGS) system RIX and TIPS, a prerequisite for funding and defunding the accounts of future Swedish participants in the latter.
In the second phase, the Swedish market will test the TIPS platform to prepare for final migration in the course of the first quarter of 2023.
Sweden is already one of the EU’s, if not the world’s, most advanced countries when it comes to instant payments usage.
For example, the country’s popular instant mobile payments service, Swish, launched a decade ago and is used by more than 90 percent of Swedish adults. In 2021, it recorded 770m transactions, equivalent to 74 transactions per person during the year.
Back in October, VIXIO reported that Swish was planning to migrate to the new RIX-INST service.
RIX-INST is an open system for participants who wish to join and work on transferring Swish payments to RIX-INST is scheduled to be completed at the beginning of 2023.
However, Swish was only designed for low-value payments. According to the Swedish Bankers’ Association, “the new settlement service RIX-INST will open up an opportunity for new solutions”, which could include development of instant payment services supporting business-to-business (B2B) payments and various disbursement use cases.
Although TIPS, which launched in 2018, currently only settles payments in euros, it was designed and developed to allow settlement in central bank money in several currencies.
Norway and Denmark’s central banks have also expressed an interest in joining TIPS with their respective national currencies to offer instant payment settlement in central bank money in their respective nations.
Denmark announced in December 2020 that it was keen to be fully migrated to TIPS by 2025, while Norway’s central bank said that it was entering formal discussions with the European Central Bank in November last year.
