Payment providers can now settle instant payments between accounts held in euros, Danish kroner and Swedish kronor through a new service launched by three European central banks.

The European Central Bank, Danmarks Nationalbank and Sveriges Riksbank have activated a service linking their instant payment systems, allowing both sides of a currency exchange to complete at the same time.

A payment involving euros and Swedish kronor requires one party to deliver euros and another to deliver kronor. The new service completes both transfers together, reducing the risk that one currency moves before the other.

The central banks formally activated the service after completing technical testing.

How the service works

The European Central Bank operates TARGET Instant Payment Settlement, usually shortened to TIPS. It launched the system in 2018 to help banks and other payment providers complete instant payments at any time of day.

Consumers and businesses do not use TIPS directly. It operates behind the banking apps and payment services they use to send money. TIPS originally handled payments in euros. Sweden later connected its instant payment infrastructure, known as RIX-INST, while Denmark introduced a version of TIPS for payments in Danish kroner.

The latest development connects the three currency systems. Banks and other payment providers participating in them can apply to use the cross-currency service.

The payments settle in money held directly with a central bank. This reduces credit risk because the transfer does not depend on funds held by a commercial intermediary.

TIPS timeline

  • 2018: The European Central Bank launches TIPS for instant payments in euros.
  • 2024: Sweden connects the Swedish krona to TIPS through its RIX-INST instant payment system.
  • 2025: Denmark introduces TIPS settlement for instant payments in Danish kroner.
  • June 2026: The three central banks activate cross-currency settlement between the euro, Swedish krona and Danish krone systems.

Previously, TIPS could process instant payments within each currency. The new service enables participating providers to settle payments between the three currencies.

Reducing gaps between payments

Cross-currency transactions usually involve two connected payments. One party sends one currency and receives another. When each transfer completes separately, one side may deliver its currency before receiving the other.

The new service links both parts so that either both complete or neither does. The central banks developed the service as part of wider efforts to improve cross-border payments. Its effect will depend on how many payment providers join and how they turn the underlying infrastructure into services for customers.

Laurent Descout, co-founder and CEO of foreign exchange and treasury company Neo, said businesses still face delays, limited visibility and unclear currency conversion costs when making cross-border payments.

“By enabling simultaneous settlement in central bank money between the euro, Danish krone and Swedish krona, this initiative can make cross-border transactions faster, more secure and more predictable,” he said.

Descout added that payment providers would now need to make the service available through products that businesses could use.

Banks face an around-the-clock funding challenge

The launch also raises questions about how banks manage the money they keep available for instant payments.

Instant payment systems operate 24 hours a day, including weekends and public holidays. Treasury teams, which manage a bank’s cash and funding, often work within more limited hours.

Participating banks therefore need to keep enough money available in each currency to complete payments at any time. Holding too little could delay transactions, while holding too much leaves money sitting unused.

Pratiksha Pathak, partner and head of payments services at consultancy RedCompass Labs, said the service gives payment providers a clearer route for transactions between the connected systems.

However, she said liquidity management would influence whether cross-currency instant payments could operate at scale. Liquidity refers to money that a bank or payment provider can access immediately to complete payments.

“Instant payment systems operate around the clock, while wholesale settlement and treasury processes still run on more limited windows, creating a risk of higher pre-funding costs and idle capital,” Pathak said.

Pre-funding involves placing money in a payment account before transactions arrive so that the provider has enough available to complete them.

Pathak added: “Those liquidity challenges need to be addressed so that faster settlement translates into a faster, more predictable experience for businesses and consumers.”

Banks adapt liquidity controls

The growth of instant payments is increasing the need for banks to monitor their available funds throughout the day.

Planixs, a provider of treasury and liquidity management software, estimates that TIPS and EBA Clearing’s RT1 instant payment system handled a combined average of 8.6 million transactions a day in 2025.

Dave Wild, head of payments innovation and strategy at Planixs, said: “Payment flows are becoming more intraday and event-driven. The challenge isn’t just visibility, it’s understanding how liquidity will evolve and where intervention is needed.”

Banque Internationale à Luxembourg said it introduced real-time monitoring of its TIPS funds earlier this year as part of an upgrade to its treasury operations.

The cross-currency service is available to eligible banks and payment providers connected to the euro, Danish and Swedish instant payment systems. Norway has also agreed to connect the Norwegian krone to TIPS in the future.