Yesterday saw Vince Cable tell the LibDem conference of his plans for banks in the UK. He told conference that he wants to hit them, hurt them, restrict their HR functions, but what he really wants to do is nudge them.
I’ll get back to Vince in a minute, because I suppose that most of you have never heard of SEPA, it stands for the Single European Payment Area and is overseen by the European Payments Council, so a brief explanation of SEPA and its aims will help explain where Vince Cable is going.
SEPA is a policy-maker-driven EU integration initiative in the area of payments designed to achieve the completion of the EU internal market and monetary union. The SEPA vision was defined by EU governments in the Lisbon Agenda, which envisages the EU internal market as the most competitive knowledge-based economy globally.
The Lisbon Agenda describes the integration of euro payment markets as a prerequisite to realise that vision. Following the introduction of euro notes and coins in 2002 the political drivers of the SEPA process – the Economic and Financial Affairs Council (in short: ECOFIN, comprising the EU Economics and Finance Ministers), the European Commission, the European Parliament and the European Central Bank (ECB) – called on the payments industry to bolster the common currency by developing a set of harmonised schemes and frameworks for electronic euro payments.
The European Payments Council (EPC) defines the SEPA payment schemes and frameworks necessary to realise the SEPA vision (see “About EPC“). I suggest you read it, because like so much of what is going down on the EU front it goes unreported, and remains unknown to the public at large.
The EU Commission’s Directive on Payment Services (PSD, 2007/64/EC) provides the legal foundation for the creation of an EU-wide single market for payments. The PSD aims at establishing a modern and comprehensive set of rules applicable to all payment services in the European Union. At the same time the Directive provides the necessary legal platform for the Single Euro Payments Area (SEPA), and entered into UK law in November 2009.
Since January 2008, banks have been migrating customers over to the new payment instruments. By 2010, the majority should have been on the SEPA framework but the financial crisis has delayed this. As a result, banks throughout the SEPA area (not just the Eurozone) will need to invest heavily in technology with the capacity to support SEPA payment instruments.
But because of the recession and subsequent financial crises SEPA has stalled, and British banks are just not making that investment, consequently the political moves for Monetary Union, for EU financial government are being thwarted, and that boys and girls is where Vince Cable comes in.
Vince Cable is doing nothing less than capitalising on the financial crisis, publicly blaming the bankers for all our woes, publicly demonising them for having the temerity to earning big bucks, what he is doing behind the scenes is forcing them to invest in monetary union, or else..
Whilst SEPA as a tool may have certain advantages for consumers, perhaps that tiny minority who travel regularly,when I look at the options available during transposition from EU law into UK law, the UK appears to have been acting on some very heavy bank inspired lobbying.
However, be very sure that what Vince Cable is really in the process of doing, like the rest of the coalition, is speeding up UK integration into the EU.
Nothing, absolutely nothing, is as it first appears in British politics.
SEPA consists of 32 countries:
* the 16 members of European Economic Area (EEA) and EU that are in the Eurozone
* the 11 members of EEA and EU that are not in the Eurozone,
* the 3 members of the EEA that are not in the EU: Liechtenstein, Iceland and Norway (Svalbard is not part of the EEA)
* 1 non EU country that uses the Euro by agreement with the EU, but is not officially part of the Eurozone: Monaco
It includes the following territories that are considered to be part of the EU in accordance with Article 299 of the Treaty of Rome: Martinique, Guadeloupe, French Guiana, Réunion, Gibraltar, Azores, Madeira, Canary Islands, Ceuta and Melilla and Åland Islands.
Vatican City and San Marino which use the Euro by agreement with the EU will be part of SEPA. As of May 2010 they both aren’t and the Vatican City isn’t even using IBAN. The principality of Andorra will not, despite its de facto adoption of the euro as its currency, because it does not have an official currency. Montenegro and Kosovo that use the Euro as their official currency without an agreement with the EU are not part of SEPA.