The Central Bank of Iceland has signed an agreement with the ECB concerning participation in the Eurosystem’s TARGET Instant Payment Settlement system (TIPS). Under the agreement, it will be possible to settle payments in Icelandic krónur instantly, in central bank money, from 2028 onwards.
With Iceland’s participation, the króna is the fifth currency in which payments can be settled in the TIPS system. The other currencies are the euro, the Swedish krona, the Danish krone and, effective in 2028, the Norwegian krone.
TIPS is part of the Eurosystem’s TARGET services. It is a system providing for instant settlement of bank-to-bank payments, which are used increasingly by households and business on a daily basis. TIPS is based on settlement between commercial banks and savings banks, using central bank money. The system is designed with an eye to security, efficiency, and coordinated execution of cross-border payments.
Iceland’s participation in TIPS will enhance the operational security of Iceland’s payments landscape by using efficient infrastructure that satisfies requirements for security, speed, reliability, and access to payment services. For the public, this means primarily that bank-to-bank payments in Iceland – for instance, between individuals, and between individuals and companies – will be carried out using more robust and coordinated infrastructure, enabling payment to be transmitted swiftly and securely, 24 hours a day.
Alongside the implementation of TIPS, an alternate route will also be introduced, in case TIPS should become temporarily inaccessible. This promotes greater continuity of critical financial services and reduces operational risk in domestic payment intermediation.
Participation in TIPS supports continued development and greater efficiency in Iceland’s payment intermediation and will replace the current system for real-time settlement of payments. This will bring Iceland’s payment processes into line with international standards and will enable the Icelandic financial market to benefit from the shared technology, operational security, and economy of scale offered by the Eurosystem.
The European Central Bank also published a press release on Iceland’s participation in TIPS alongside the signing of the agreement: Iceland joins TIPS for instant payments.