It is called TIPS, it is designed for instant payments and will be instrumental in the development and diffusion of the digital euro.
It is a platform whose name stands for TARGET Instant Payment Settlement and is entirely European with a predominantly Italian contribution. In fact, a central role in its implementation is played by the Banca d’Italia, which acts as service provider and service operator, as well as Deutsche Bundesbank, Banque de France and Banco de España.
TIPS for instant payments and why it will benefit the Digital Euro
TIPS is actually already operational and handles electronic instant payments. It operates both in B2B and B2C.
The special feature of TIPS is that it has a commission cost of 0.2 euro cents. During its presentation in 2018, Ignazio Visco, Governor of the Banca d’Italia, said that with 1 euro it was possible to make 500 transactions.
Operational 24 hours a day, 365 days a year, it can process 500 payments per second, 2000 at peak times, for a total of 40 million payments per day.
The Governor of the Banca d’Italia Ignazio Visco confirmed that it will be used for the digital euro.
He did so during a speech at the Future of Payments in Europe conference:
“The Banca d’Italia is working with the ECB and other central banks in the euro area to assess the potential of TIPS as a possible solution for a digital eruption”.
TIPS could be particularly useful in the case of the digital euro because it would be the meeting point between citizens who open a current account with the European Central Bank, and the ECB itself.
TIPS already has an established track record. As early as August 2019 it was integrated into Nexi, the electronic payments platform for banks, companies, institutions and public administration.
In addition, TIPS participated in an experiment organised by SWIFT (the transnational payments giant), demonstrating its full power in a project involving 19 banks in 13 different markets.
Ignazio Visco spoke about it:
“The fastest payment was initiated in Singapore and reached the beneficiary in Spain, via Germany, in 41 seconds. This demonstrated the potential of TIPS to mitigate risks and address the main challenges posed by cross-border trade in terms of speed and access to payment systems”.
In short, the road seems to be paved. Sooner or later, in response to the challenge launched by the stablecoins, Europe will equip itself with a digital euro. It will be a currency that will travel quickly from one user to another and for this reason, will have nothing to envy from Tether, Diem (formerly Libra) and others.
One detail holds true: it is a highly centralized system.