ANNUAL REPORT 2008 - Polymer Bank Notes of the World

innovative firms, and iii) financial modernisationand governance and the integration of theEuropean financial system into global capitalmarkets.ACTING AS A CATALYST FOR PRIVATE SECTORACTIVITIESProgress in European financial integrationdepends to a large extent on private sectorinitiatives aiming to make use of the existingopportunities for cross-border business. Publicauthorities support such private efforts.In 2008 the Eurosystem continued to stronglysupport the Single Euro Payments Area (SEPA)initiative, which allows individuals, corporationsand public administrations to make cashlesspayments in euro throughout the euro area andthe other SEPA countries from a single accountanywhere in SEPA, using a single set of paymentinstruments, as easily, efficiently and safelyas they can make them today at the nationallevel. SEPA is a move towards an integratedpayments market in Europe which will bringsubstantial economic benefits to society. SEPAis the logical consequence of the introduction ofthe euro in, currently, 16 countries in Europe.The successful launch of the SEPA credittransfer in January 2008 marked the initiative’sfirst major milestone. Since then, the firstbenefits of SEPA have materialised for banksand, more importantly, have started to reach theend-users of payment services. The Eurosystemhas invited the operators of infrastructures toassess their SEPA compliance on a regular basis.Most automated clearing houses which processcredit transfers in euro are now compliantwith the credit transfer scheme, and several ofthem have made the step from offering purelydomestic operations towards providing serviceson a pan-European basis. However, as set out inthe sixth progress report on SEPA issued by theEurosystem in November 2008, the migrationprocess is still too slow and measures should betaken to accelerate it.The SEPA framework for card payments wasalso put in place in January 2008, but more effortis still needed in this field. The SEPA frameworkfor cards should bring about greater choice andefficiency through the gradual elimination oflegal, technical and scheme-imposed obstacles,as well as through increased competition inthe fields of issuing, acquiring, acceptance andprocessing. The migration to chip cards witha personal identification number (PIN), animportant SEPA building block, advanced wellin 2008. Several card schemes adapted their rulesto the SEPA requirements. However, doubtsremain about whether all card schemes haveeffectively separated their processing activitiesfrom their scheme management functions. TheEurosystem expects at least one additionalEuropean card scheme to emerge in the comingyears which meets its requirements and those ofcardholders, banks, merchants and competitionauthorities. The Eurosystem has been discussingthis topic with major European banks and otherstakeholders since April 2008, and has observedincreasing support. Several market initiativesare under way to create such a European cardscheme, which the Eurosystem considers to bea clear sign that the market recognises the needfor a scheme of this nature.Preparations continued to be made for thelaunch of the SEPA direct debit scheme on1 November 2009, resulting in the adoptionof two rulebooks on the core and businessto-businessservices. However, uncertaintiesstill surround the launch of the scheme, andthese must be resolved urgently, in particularthose related to the application of a multilateralinterchange fee. To support the timely launch ofthe scheme, in September 2008 the ECB, in closeconsultation with the European Commission,suggested an interim arrangement wherebyexisting multilateral interchange fees would beapplied to SEPA direct debits. During a transitionperiod, which would only last a few years, bankswould have to change their business models andinform their customers in an adequate manner.The Eurosystem continued its efforts to ensurethe timely launch of these new payment servicesat the European level. In this context, the sixthprogress report on SEPA suggests priorities andencourages further work on the project.ECBAnnual Report2008159