Treasury News Network

Learn & Share the latest News & Analysis in Corporate Treasury

  1. Home
  2. Bank Relations & KYC
  3. Evaluating Banks’ Overall Performance

EU adopts euro instant payments rules – Industry roundup: 27 February

EU adopts euro instant payments rules to challenge Visa and Mastercard

The European Union Council has adopted rules to make instant payments in the euro currency fully available round-the-clock to consumers and businesses in the EU and in European Economic Area (EEA) countries.

The move is regarded as enabling European payments companies to compete better against US operators Visa and Mastercard.

The new regulation will allow customers to transfer euro-denominated money within 10 seconds at any time, including outside business hours, both within the same country and also to another EU member state, the EU Council said.

Currently, payments using existing cards and deposits may take several business days.

The Council added that the new rule would factor in countries outside of the euro-zone economic bloc.

“The new rules will improve the strategic autonomy of the European economic and financial sector as they will help reduce any excessive reliance on third-country financial institutions and infrastructures,” the EU Council said in a statement.

The EU has been working on reforms to open a up payments market long dominated by banks and by Visa and Mastercard, which are now being challenged by fintechs that offer rival services using data from customers’ bank accounts.

The new rules will come into force after a transition period that will be shorter in the euro area and longer in the non-euro area, which needs more time to adjust.

The regulation grants access for payment and e-money institutions (PIEMIs) to payment systems, by changing the settlement finality Directive (SFD). As a result, these entities will be covered by the obligation to offer the service of sending and receiving instant credit transfers, after a transitional period. The regulation includes appropriate safeguards to ensure that the access of PIEMIs to payment systems doesn’t carry additional risk to the system.

Under the new rules, instant payment providers will need to verify that the beneficiary’s international bank account number (IBAN) and name match in order to alert the payer to possible mistakes or fraud before a transaction is made. This requirement will also apply to regular transfers.


South Korea’s FSC announces initiatives to boost open banking

South Korea’s Financial Services Commission (FSC) has set out two new policy initiatives designed to further develop and expand the availability of open banking services in the country.

The first initiative will see an expansion in the scope of data available to open banking across both personal and business accounts, enabling third parties using open banking to make multi-account inquiries simultaneously and in real time.

Business account data comes within this scope, in order to allow financial services companies to launch more tailored fund management products for their corporate clients.

The second initiative by the FSC is seeking to make open banking available in an offline capacity, such as through bank branches. This will enable account holders to use any bank or bank branch to action services like account inquiries and money transfers.

South Korea currently has two forms of infrastructure at play to support its open banking endeavours. This includes its open banking service, which launched in December 2019 and has, the FSC says “become an essential payment infrastructure” for fintechs in the country.

The second infrastructure, the API-based MyData service, provides a government-backed hub for consumers to take control over how their data is applied to open banking, and was first introduced in January 2022.

The FSC says it plans to draw up a roadmap for bringing the second generation of the MyData service to fruition, which will include a platform “where financial consumers can experience more diverse and convenient services in a safer manner”.

Kim Soyoung, vice chairman of the FSC, said that although the existing systems have “made accomplishments in improving convenience for financial consumers and enabling innovative financial services”, the two new initiatives will help continue this momentum, especially in granting offline access for the financially excluded.


Frankfurt wins contest to host new anti-money laundering authority

Frankfurt has won the race to host the European Union’s prestigious new anti-money laundering authority, AMLA, the centrepiece of reforms that follow a series of dirty money scandals.

Germany’s financial centre beat off competition from major cities including Paris, Madrid and Rome, in vote procedure that could set a new precedent for the future siting of EU agencies.

“We’ve had so many wake-up calls in recent years when it comes to dirty money being washed through the mainstream of the financial system,” the European Commission’s Mairead McGuinness told reporters. “Tonight we are answering those calls.”

The seat choice is the last remaining element of an EU reform that sees limits on large cash transactions and new identity checks for football agents and sponsors.

It follows a scandal in which Danske Bank pleaded guilty to laundering hundreds of billions in dirty Russian funds through its Tallinn branch, and the collapse of lenders such as Malta’s Pilatus and Latvia’s ABLV in 2018.

While major EU institutions such as the commission and parliament are located in Brussels, Luxembourg and Strasbourg, its agencies, concerned with more specialised or analytical tasks, are spread across the region. Countries generally support the idea of spreading EU largesse and bringing decision making closer to home, but more far-flung bodies can have difficulties attracting staff.

The location of EU agencies has historically been decided by the bloc’s member states meeting in the EU’s Council and have been so keenly contested that one recent case, the European Medicines Agency, had to be decided by drawing lots.

That changed after EU judges ruled members of the European Parliament (MEPs) should get an equal say – leading to a process in which both the European Parliament and Council were granted 27 votes each.

With nine candidates for AMLA, officials were less than convinced there’d be a clear outcome, even up to the last moment.

“The process is established to find a winner, but we will see if the process will be successful,” Vincent Van Peteghem, the Belgian finance minister who currently chairs the council, told Euronews on Tuesday.

In practice, the Council appears to have stitched the deal up, caucusing in a way that virtually guaranteed Frankfurt’s victory.

In the final round of the secret ballot, Frankfurt received 28 votes, Madrid 16, Paris six, and Rome four, lead lawmaker Eva Maria Poptcheva (Spain/Renew Europe) told reporters, and reports suggest that it was not the first choice of many.


China “dodges US tariffs by exporting via Mexico”

China is exporting greater volumes of merchandise through Mexico to end markets in the US to avoid stringent tariffs imposed by Donald Trump’s administration and retained by the White House since Joe Biden took office, according to figures from Container Trades Statistics analysed by Xeneta, the Norway-based freight analytics platform and the Financial Times.

It shows the number of 20ft containers shipped from China to Mexico reached 881,000 over the first nine months of 2023, up from 689,000 year-on-year. Mexico recently surpassed China as the largest exporter of goods to the US as truck shipments across the border into the US increase rapidly.

“Reducing reliance on China is an easy soundbite for politicians, but the reality is very different,” commented Xeneta’s Chief Product and Data Officer, Erik Devetak. “A genuine realignment of global manufacturing would be a vast undertaking which will take many years and a colossal amount of investment and state intervention to achieve.

“The Mexico story highlights the real paradox,” added Center for Strategic and International Studies Senior Fellow, Ilaria Mazzocco. “The US wants to create alternative supply chains in partner countries . . . but what happens when it’s Chinese companies that are building those supply chains?”


BNY Mellon launches US dim sum bond service

BNY Mellon has announced the launch of its US Withholding Tax Administration service, described as “a market-first solution that enables US issuers to tap into Hong Kong’s vibrant offshore renminbi (RMB) market through Dim Sum Bond (DSB) 1 issuances.”

Developed in collaboration with the Central Moneymarkets Unit (CMU) of the Hong Kong Monetary Authority (HKMA), the service allows US issuers to gain access to a wider pool of liquidity and benefit from lower funding costs in Hong Kong and mainland China while complying with US tax withholding requirements on US source income paid to foreign persons and entities. It also expands the range of offshore RMB bonds available to institutional investors from mainland China, offering them more investment opportunities.

“We are delighted to collaborate with the CMU to deliver this unique solution,” said Fangfang Chen, Head of Asia Pacific. “As investor demand for RMB-denominated opportunities continues to expand globally, this service resolved a key hurdle for U.S. issuers seeking to benefit from the new Bond Connect scheme between Hong Kong and mainland China. Our work with the CMU also underscores our shared commitment to enhance global capital markets connectivity.”

Hong Kong is the world’s largest offshore RMB centre, with Dim Sum Bond issuance reaching a record RMB 343 billion in the first eight months of 2023, representing a 62% year-on-year increase.

“We are pleased to collaborate with BNY Mellon to enable issuers to leverage the Bond Connect scheme and Hong Kong’s financial infrastructure to access onshore and offshore RMB capital,” said Stanley Chan, President, Central Moneymarkets Unit of the HKMA.

Cécile Nagel, Global Head of Corporate Trust, BNY Mellon, added: “We are continuously expanding our capabilities to better support our global client base in issuing new debt, refinancing and securitisation. With the launch of this service, US issuers can now more efficiently tap into offshore and onshore bond market opportunities and institutional investor base.”


Asian central banks co-ordinating CBDC work

Members of the South East Asian Central Banks (SEACEN) alliance are developing central bank digital currencies (CBDCs) in tandem, with “near-real-time exchanges of information on progress”, says the deputy governor of the Reserve Bank of India.

Michael Patra spoke recently at the 59th SEACEN Governors’ Conference in Mumbai and reported that members are at various stages of developing their CBDCs but are actively co-ordinating their efforts.

“The overarching goal for developing CBDC as digital cash among the SEACEN central banks appears to be to create a resilient payment system for consumers and businesses to transact in any situation,” he said.

One-third of Asian central banks deploy big data algorithms for anti-money laundering (AML) and terrorism financing purposes, Patra also revealed. “Machine learning has also been extensively used in Asia for research purposes to inform monetary policy decisions, facilitate data management, and support regulatory supervision.”

The share of Asian central banks and supervisory authorities adopting big data and machine learning has risen to 86%. This involves nowcasting exercises, applications to granular financial data, and suptech/regtech applications such as the computation of the economic policy uncertainty (EPU) indices in India.

Other applications of machine learning include using text analysis to evaluate monetary policy credibility, ensuring consistency in central banks’ communication of supervisory issues to financial institutions, improving efficiency in the compilation of statistics, assessing the state of the labour market or of trade conditions, extracting information on tourism activities, and capturing firms’ sentiment or evaluating employees’ feedback.


China proposes new ESG rules

China has unveiled new environmental, social and governance (ESG) disclosure rules for its biggest companies as the world’s top polluter seeks to align with European requirements and bring foreign investment back to its struggling economy through greater transparency and reduced greenwashing risks.

More than 400 companies, including those in key stock indexes, will need to publish sustainability reports by 2026, according to draft guidelines released this month by China’s three main exchanges. The corporations, which collectively account for more than half of the bourses’ combined market value, have to disclose their ESG governance and strategy, along with metrics including their energy transition plans and impact on the environment and society.

The move is seen as a strategic effort by China to bring its regulations in line with European counterparts, where the Corporate Sustainability Reporting Directive (CSRD) mandates similar disclosures starting this year. The convergence with global standards is expected to make Chinese investments more appealing to foreign investors.

“By catching up with international standards, the government hopes to attract foreign money — especially from institutional investors,” said Boya Wang, a Morningstar ESG analyst.

As China takes steps towards greater ESG disclosure and alignment with international standards, it remains to be seen how these changes will impact investor sentiment and whether they will succeed in reversing the recent decline in foreign investment.


New Forests invests in Thailand peatland restoration project

The New Forests-managed Tropical Asia Forest Fund 2 (TAFF2), had made its first investment in Thailand’s Kuan Kreng Landscape (KKL), which holds the country’s second largest peat swamp forest area.

Two-thirds of the 70,715ha KKL peat swamp forest is degraded due to drainage canal networks associated with agricultural land use, which lowers water tables and causes greenhouse gas (GHG) emissions from peat oxidation.

About 40% of the KKL landscape is suitable for a carbon project and, according to projections, has the potential to generate on average over 500,000 carbon credits per year.

Australia-based asset manager New Forests has established a local entity, Restore Nature Thailand, which works with the Thai government and local community groups to design and implement a project that aims to raise the ground water table in select areas through the construction of semi-permanent canal blocks to restore degraded peatland.

In addition, the project will undertake revegetation and enrichment planting to create biodiversity corridors to support the distribution of fauna and flora. Development of an integrated fire management programme will also be a key component of the project.

Geoffrey Seeto, managing director of New Forests Asia said: “KKL is home to species who are important on a global scale. Implementing impact activities related to climate change, support for communities and rural livelihoods, and protection and enhancement of biodiversity are in alignment with TAFF2’s impact objectives and our investors’ desire to invest in activities that have a positive impact on the environment and communities.”

Investors in TAFF2 include Singapore’s Temasek and Frances’ TotalEnergies and three leading Japanese institutions Mitsui, Nomura, Sumitomo Mitsui Trust Bank. Other investors are Asian Development Bank (ADB), the Australian government and a philanthropic group, David and Lucile Packard Foundation.


SIX and Greenomy develop SME sustainability assessment tool

Switzerland’s financial services multinational SIX has linked with software developer Greenomy to launch a sustainability assessment tool aimed specifically for small to medium-sized enterprises (SMEs).

The collaboration “marks a significant step towards integrating SMEs into the financial market with a focus on sustainability,” according to a release. “SIX is renowned for its comprehensive financial services, while Greenomy stands out for its exceptional software-as-a-service platform that drives sustainability efforts.

“The partnership between SIX and Greenomy is aimed at addressing the critical need for SMEs to align with sustainable and low-carbon economic practices. Recognising the essential role that SMEs play, this collaboration seeks to enhance their participation in the transition towards a more sustainable future.

The newly introduced SME Sustainability Assessment Solution simplifies the assessment of sustainability metrics while supporting banks in meeting the EU’s Banking Book Taxonomy Alignment Ratio (EU BTAR) requirements. Furthermore, it encourages a sustainability-focused dialogue between financial institutions and SMEs, aiding the latter in navigating the complexities of disclosure and reporting standards.

“This initiative is set to revolutionize the way banks assess and manage sustainability risks and opportunities within their SME portfolios,” the release added. “By providing a comprehensive tool for sustainability assessment, ongoing monitoring, and support in green lending decisions, SIX and Greenomy are paving the way for a more sustainable financial ecosystem.”


Intellect launches ‘First Principles’ technology suite,

Intellect Design Arena, the Chennai, India-based multinational fintech announced the launch of its ‘First Principles’ technology suite,, for banks in the Middle East and Africa, “empowering them to design and operate future-ready technology solutions for their market leadership.”

A release added that “as the most comprehensive open finance platform, will simplify banks’ complex technical environment while:

  • Empowering banks with 329 microservices, 1757 APIs and 535 events, and enabling them to design future-ready technology solutions.
  • Acting as a catalyst for digital and cognitive enterprise transformation by signifying the shift with Intellect’s leadership guiding banks to stay ahead.
  • Fostering financial innovation and redefine the future of financial technology in the Middle East and Africa, giving these regions a global edge.
  • Helping financial institutions to progressively transform technology, leveraging marketplaces like IDC, iKredit360, Digital Transaction Banking, Digital Wealth Management and Insurance from BankTech Wave 3 to Wave 5.

Arun Jain, CMD and Chief Architect of Intellect Design Arena, commented: “We have secured 29 mandates from global banks who have chosen to use services. We have conducted over 150 workshops to assist these banks in designing their future strategies around customer opportunities rather than just focusing on technology maximisation and optimisation.”

Like this item? Get our Weekly Update newsletter. Subscribe today

Also see

Add a comment

New comment submissions are moderated.