The ECB and Seðlabanki Íslands have signed an agreement for Iceland to join the TIPS instant payment settlement system, with the Icelandic króna settling from 2028.
The European Central Bank and Seðlabanki Íslands, Iceland's central bank, have signed an agreement for Iceland to join the Eurosystem's TARGET Instant Payment Settlement (TIPS) system. From 2028, payments in Icelandic króna will be settled instantly in central bank money through TIPS. The Icelandic króna will become the fifth currency available for settling retail payments through TARGET Services, joining the euro, Swedish krona, and Danish krone, which are already available, and the Norwegian krone, which is also scheduled to join in 2028.
TIPS infrastructure and multi-currency model
TIPS is the Eurosystem's retail payment settlement system, enabling banks and payment service providers to offer customers real-time fund transfers around the clock every day of the year. It settles transactions in central bank money, providing finality and eliminating settlement risk for instant payment flows. All TARGET Services are designed to host transactions in currencies other than the euro, a feature that enables non-EU European countries to connect their payment infrastructures to the Eurosystem's settlement backbone without adopting the single currency.
Iceland's participation in TIPS as a non-EU country follows the precedent established by Sweden, Denmark, and Norway, reflecting the framework's design as a pan-European rather than exclusively eurozone infrastructure.
Regulatory and strategic context
For Iceland, joining TIPS aligns its payment infrastructure with SEPA practices and connects it to the scale and operational resilience of the Eurosystem's TARGET Services. The agreement positions Iceland's instant payment infrastructure within a broader European settlement network, improving interoperability with payment systems across the continent.
For the Eurosystem, the addition of Iceland reinforces the integration of European financial infrastructures beyond EU borders and supports the strategic autonomy objective of reducing reliance on non-European settlement infrastructure for retail payments across the continent.
The agreement was signed by ECB President Christine Lagarde and Seðlabanki Íslands Governor Ásgeir Jónsson. Implementation is targeted for 2028.
