It was created in 1925 by the government, which was unimpressed by the then private service offerings for paying remotely – basically sending cheques and banknotes by post! With the infrastructure in place, transfers via Postgirot quickly gained ground. Private banks took some time to react, but did so compellingly when in 1959 they founded Bankgirocentralen – the future leading clearing house in Sweden. Bankgirot also kick-started a long tradition of Swedish banks working together in the fields of payments. Numerous are their common services targeted at end-users, that is, households or businesses as payers or payees. Many were developed and then operated by Bankgirot, which became more than a pure clearing house. Today, Bankomat (ATMs) and Getswish (instant mobile payment service) are other examples of joint ventures that allow their owners, the banks, to offer joint payment services to customers. By collaborating on rules and standards for common payment instruments, banks enabled payments between their customers. Basically, you were not limited to making payments within the same bank, a closed-loop system, as it is sometimes called. Broadening the network of payers and payees provided a reach that increased the efficiency of the overall payment system. Increased digitalisation also meant that sharing infrastructure and development costs was cost-effective for the banks. Most recently, the major Swedish banks have joined forces with Danish and Finnish equals to build a Nordic clearing platform – the P27 initiative. As well as further exploiting economies of scale, the intention is to smooth payments across borders within the Nordics.

However, in a future where a considerable amount of payments will be instant, this is not a sufficient arrangement and could imply risks to financial stability. As a consequence, and after a thorough analysis, the Riksbank decided to develop a new service for instant payments. RIX-INST, as we call it, will be based on the ECB’s Target Instant Payment Settlement (TIPS) platform that was launched a few years ago to settle instant payments in euro and potentially other currencies. The service will allow banks to settle instant payments between themselves in central bank money, 24/7 and all year round. On top of RIX-INST, banks can then develop similar services towards their customers. Sharing a platform with other central banks, as we basically do here, has several advantages. First of all, it entails efficiency gains due to the scale effects that I referred to before. Importantly, not only the fixed development and operating costs will be spread on larger volumes, but also future costs to protect against cyber-attacks and the like. One of the few other undisputed predictions within payments is that in the future those costs will go up. Secondly, connecting to a platform like TIPS, based on standards that are applied across the European payment market, facilitates harmonisation. This will benefit Swedish banks and their customers doing business in other European countries. Essentially, they will be able to streamline their payment processes at home and abroad. In general, harmonisation of standards also serves to promote competition in the payment market, in my view.