Iceland joins TIPS for instant payments

The European Central Bank and Seðlabanki Íslands have signed an agreement for Iceland to join the Eurosystem's TARGET Instant Payment Settlement (TIPS) system. This will allow payments in Icelandic króna to be settled instantly in central bank money as of 2028.

Icelandic króna joins instant payment network

The Icelandic króna will become the fifth currency available for settling retail payments instantly using the Eurosystem's TARGET Services, a significant step in expanding the reach of instant payments.

The euro, Swedish krona, and Danish krone are already integrated into TIPS, facilitating real-time transactions across these currencies.

The Norwegian krone is also scheduled to join the system in 2028, further broadening the non-euro currency offerings.

ECB President Christine Lagarde expressed her satisfaction after signing the agreement, noting, "We are delighted that more and more European countries, including from outside the European Union, are joining the Eurosystem's TARGET Services.

" She emphasized that this development "reinforces the integration of Europe's financial infrastructures, supports its strategic autonomy, brings economies of scale and strengthens economic relations," highlighting the broader strategic benefits beyond immediate payment efficiency.

Modernizing Iceland's payment landscape

Seðlabanki Íslands Governor Ásgeir Jónsson hailed the agreement as "an important step in modernising Iceland's payments landscape and ensuring it is fit for the future.

" He underscored that TIPS membership will strengthen both the security and efficiency of instant payments in Iceland, enhancing the resilience of its payment infrastructure.

This move also aligns Iceland's payment processes with SEPA practices, allowing the country to benefit from the scale and expertise of the Eurosystem's TARGET Services.

These services, developed and operated by the Eurosystem, facilitate transfers between banks, businesses, and individuals using central bank money.

TIPS, as a retail payment settlement system, specifically enables real-time fund transfers around the clock, every day of the year.

A template for wider European integration

This agreement is a pragmatic step for Iceland, securing its payment system within a robust European framework.

It demonstrates how smaller, non-eurozone economies can achieve significant infrastructure upgrades without full EU membership.

The move subtly reinforces the Eurosystem's growing influence as a pan-European financial backbone, extending its reach and standards.