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The Interconnection Between the Eurozone Debt Crisis and Payments Market Harmonisation

by Bob Lyddon, Managing Director, IBOS Banking Association

Major stabilisation efforts behind the euro will certainly be undertaken this autumn, even if the legal powers of the Eurozone governments and central banks to take these measures have been questioned. In parallel, the preparations for payments market harmonisation, in the form of the Single Euro Payments Area (SEPA) continue, apparently unaffected. Indeed, the headline is that the regulation for a SEPA Migration End Date (aka the SMED) is imminent, and that market participants must then migrate to the new harmonised environment. This article challenges the separation of the two issues and tries to pinpoint where the SEPA rubber hits the Eurozone debt crisis road.

The SEPA programme outlined by the European Payments Council addresses a wide range of technical and operational matters i.e., new payment schemes, the usage of International Bank Account Number (IBAN), clearing and settlement infrastructure, governance and data standards.

SEPA is an action to underpin a Single Market, following on as it does from the Lisbon Agenda in 2000 to promote the EU to the leading knowledge-based economic zone on earth by 2010 (the end date on the original SEPA Roadmap). SEPA was also meant to contribute to much increased direct SME-to-SME trading cross-border within the EU. It is absolutely predicated on the existence of a Single Money in this Single Market. An admission either that the Single Market contains different country risks or that the euro is no longer a single currency (because it exists in many guises in what should be its purest form – central bank money) could lead to stakeholder behaviour that frustrates the SEPA programme.