Denmark signs agreement to join ECB's payment systems

24 Mar '24

2 min read

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Denmark will integrate into the ECB's T2 and TIPS payment systems, marking a significant step towards financial integration with a launch set for April 2025.
This collaboration will enable smoother euro and Danish kroner transactions, making the krone the third currency settled in TIPS.
The move will enhance transaction efficiency and liquidity management.

In a significant move towards financial integration, the European Central Bank (ECB) and Danmarks Nationalbank have officially signed an agreement that will see Denmark join the ECB's Target2 (T2) wholesale payment system and the Target Instant Payment Settlement (TIPS) service. This collaboration marks a crucial step in facilitating smoother transactions in both euro and Danish kroner, with the Danish krone becoming the third currency to be settled in TIPS following the inclusion of the Swedish krona earlier this year.

Danish financial institutions are currently in the testing phase of both systems, with a full launch expected in April 2025. Danmarks Nationalbank is no stranger to the Eurosystem’s payment services, having already implemented the T2 system for euro transactions and utilised the Target2-Securities (T2S) platform for the settlement of securities in both euro and kroner since October 2018, ECB said in a press release.

The integration of the Danish krone into the Eurosystem's payment services framework is set to offer comprehensive benefits for market participants in Denmark. They will have the capability to settle payments and securities in their national currency across all three TARGET services, alongside enhanced liquidity management features.

Target Services, developed and operated by the Eurosystem, leverage central bank money to ensure secure and efficient transfers between banks, businesses, and individuals. The system's multicurrency functionality, first introduced with the T2S platform for the Danish krone in October 2018, supports transactions in multiple currencies, including the euro and the Swedish krona. TIPS, known for its around-the-clock operation, is designed to facilitate instant payments.

“We are delighted that Denmark will use the Eurosystem’s Target Services platform to settle wholesale and instant payments in Danish kroner,” said ECB president Christine Lagarde. “This will reinforce the integration of Europe’s financial infrastructures beyond the euro area, bring economies of scale and lay the foundation for cross-currency payments, providing tangible benefits for people in the euro area and in Denmark.”

“We are very happy to join T2 and TIPS, and thereby be the first non-euro country to be part of all current Target services, offering strengthened IT security and harmonised infrastructure for the Danish financial market,” said Danmarks Nationalbank governor Christian Kettel Thomsen.

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