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Jersey To Join Single Euro Payments Area

by Jason Gorringe,, London

24 May 2010

The Jersey Financial Services Commission has published a consultation paper outlining measures for regulating and supervising providers of payment services to pave the way for the island to join the Single Euro Payments Area (SEPA) as a non-European Economic Area (EEA) jurisdiction.

The SEPA is an EEA-wide initiative that is designed to enable individuals and businesses to make and receive payments in euros - within national boundaries and cross-border (within the SEPA) - under the same basic conditions, rights and obligations.

Currently, the geographical scope of the SEPA encompasses 32 countries: the 27 European Union member states (which includes the United Kingdom), Iceland, Liechtenstein, Norway, Switzerland and Monaco.

The key aim of the SEPA is to improve the efficiency of cross-border payments and turn the fragmented national markets for euro payments into a single domestic one. The SEPA will enable customers to make cashless euro payments to anyone located in a SEPA country using only a single bank account and a single set of payment instruments (for example, by means of SEPA-standardized credit transfers or direct debits).

The SEPA initiative includes the development of common standards, procedures and infrastructure to enable economies of scale. This is expected to reduce the cost of moving euro funds across Europe. In the long term, the uniform SEPA payment instruments that have been developed are expected to replace national euro payment instruments currently being operated in Europe.

The Jersey government has considered the pros and cons of Jersey seeking admittance, as a third country, to the SEPA following discussions with the Commission and the Jersey Bankers’ Association (JBA).

After consideration, in particular of industry input through the JBA, the government has reached the conclusion that Jersey is likely to be placed at a competitive disadvantage if it does not obtain admittance to the SEPA and should therefore make preparations to support a future application. Guernsey and the Isle of Man are also considering whether or not to make similar preparations.

The consultation paper issued by the Commission supports the government's work by consulting on options to meet those aspects of the governing body's third-country admittance criteria that cover the regulation and supervision of providers of payment services.

The consultation paper considers what the scope of the regulation and supervision of providers of payment services should be and the methods that could be used for the implementation of requirements. Fundamentally, the scoping issues arise as a result of considering whether Jersey should seek to do just the minimum necessary to achieve jurisdictional admittance into the SEPA or go beyond that minimum, for example, for reasons of efficiency, fairness or consumer protection.

Comments on the proposals in the consultation paper are requested by August 20, 2010.

TAGS: individuals | Isle of Man | tax | business | commerce | banking | offshore e-commerce | international financial centres (IFC) | Guernsey | Jersey | offshore | e-commerce | legislation | offshore banking | currency | standards | regulation

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