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be a requirement of SEPA membership, the jurisdiction is not prepared to make any law draft decisions in the absence of third-party joining criteria. “As a third-party country we are not

clear what the joining requirements are at this stage. We want to make sure that we are in the best position to evaluate SEPA membership,” he says. However, SEPA has found an advocate

The Association of Guernsey Banks believes SEPA membership will help Guernsey maintain its competitiveness as an international financial centre

a significant amount of euro payments,” according to Richard Walker, Director of Policy and International Affairs at the GFSC. “We are currently liaising with the Commerce and Employment Department on this matter, and in due course we will form a judgement as to whether there is real merit in Guernsey applying for membership of SEPA. No decision on joining SEPA could be made without the support of the banking industry in Guernsey.” The AGB believes that SEPA membership

will help Guernsey maintain its competitive edge as a leading international financial

What is SEPA?

THE SINGLE Euro Payments Area (SEPA) is being driven forward by the European Payments Council (EPC) to achieve a harmonised market for cross-border and domestic euro-denominated payments of €50,000 or less – a threshold which is likely to be increased in future. It also aims to:

n Improve the reliability of pan-European payments n Reduce the number of cash transactions by encouraging the use of e-money n Reduce the costs of electronic euro payments by encouraging greater competition among payment services providers n Step up the campaign against money laundering.

The project gained statutory support in December 2007 with the EU’s adoption of the Payment Services Directive (PSD), which has broader

38 August/September 2011

implications for payment-service providers and payment services. SEPA elements of the PSD must be implemented into the national legislation of countries seeking membership. So far, 32 countries in Europe are committed to joining – all 27 EU members as well as Iceland, Norway, Switzerland, Liechtenstein and Monaco. SEPA calls for the replacement of existing national payment

mechanisms and processes with common pan-European payment instruments, standards and procedures. It involves introducing common schemes for euro credit transfers (SEPA Credit Transfer) and euro direct debits (SEPA Direct Debit) as well as the creation of a single euro payments area for cards. So far implementation has been slower than expected, but the EU is

looking to enforce deadlines on EU members (not third-party countries) with a view to securing full migration to SEPA Credit Transfer in 2012.

centre, while also ensuring that it operates a similar regime for payment services as other crown dependencies. However, the benefits of SEPA membership for local industries and end users must be proved. “Our businesses are not high-volume

retail financial services businesses for which the cost of payment transactions is very important,” says John Robinson, Chairman of the AGB, pointing out that SEPA is likely to benefit banks the most. He explains that, although Guernsey is

working with Jersey on a Financial Services Ombudsman Scheme, which is expected to

in Guernsey’s Commerce and Employment Department, which is leading Guernsey’s discussions with the EPC. “Guernsey has significant euro deposits,

alongside sterling and US dollars, and euros could eventually become the largest currency held,” says Jarrod Cowley-Grimmond, Director of Finance Sector Development. “Both Jersey and the Isle of Man have

stated that this is important to their business, and we have taken the view that as most Guernsey banks are closely affiliated with – or are subsidiaries of – banks in these jurisdictions, it would not make sense for us to follow a different regime. We would not want to be the only Crown Dependency not to participate and we want to be part of this initiative so that we can offer exactly the same level of service.” From the outside it seems SEPA will benefit

many banks, businesses and individuals in the Channel Islands, and the consensus appears to be that, once the wrinkles are ironed out, entry is pretty much a given. n

LIZ SALECKA is former Editor of European Banker

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