The challenges of Southeast European countries adhering to SEPA standards, i.e., the Single Euro Payments Area, are numerous. However, experts estimate that entering such a system would bring numerous benefits for countries that do not use the euro as their currency. While many governors in the region officially talk about readiness to adapt and join SEPA, there is silence in the National Bank of Serbia. Unofficially, this is a topic in our financial market, but it is approached very carefully because it involves not only technical elements but also economic and political aspects.
SEPA represents a unified market for euro payments, allowing citizens, businesses, and public institutions to carry out all non-cash transactions in the European currency. Estimates suggest that more than 500 million citizens and around 20 million businesses and European public institutions could conduct payments in euros much more cost-effectively in the same conditions, with the same rights and obligations, regardless of their location. In terms of electronic payments, for example, this would mean no differences between cross-border and national electronic payments in euros in retail throughout the European Union, and there are numerous benefits for the economy as well.
The SEPA area currently encompasses 36 countries: all EU member states, Iceland, Liechtenstein, Norway, Switzerland, Monaco, San Marino, Andorra, and Vatican City. Although not an EU member, the United Kingdom remains part of SEPA, having similar agreements as Switzerland and Monaco. From the region, Croatia is on the list, and despite using the euro as its currency, the Central Bank of Montenegro recently initiated a project to join SEPA. The goal, as officially stated by the regulator, is to become a full member by the end of 2024, with the preceding two years dedicated to aligning their regulations with those of the EU.
In Montenegro, the issue of Southeast European countries joining the SEPA area was a key topic at a regional capital market conference last year. Representatives from the central banks of Bosnia and Herzegovina, Montenegro, Albania, North Macedonia, and Moldova participated in the debate, but not from Serbia.
“In Bosnia and Herzegovina, the strategic plan is to join SEPA. We are losing a lot of money on fees, and joining SEPA will be a priority for the development of the capital market. We have deficiencies that we need to eliminate, but we are ready,” said Halid Tvico, the head of the Supervision and Payment Systems Development Department at the Central Bank of Bosnia and Herzegovina.
In North Macedonia, they are also ready to join SEPA. Biljana Donovska Gečeva from the Central Bank of North Macedonia revealed that they have prepared the market as well.
“There are still many challenges in the country, but we have the SEPA regulation. It is essential that our national payments cost the same as cross-border ones,” stated Geceva.
In the Central Bank of Albania, they added that they have consensus on the issue with banks that, as mentioned, do not pressure them to slow down their accession to SEPA.
SEPA, Serbia, NBS, and Risks
The National Bank of Serbia did not respond to our question about whether there has been any initiative on their part for Serbia to join the SEPA area and what the stance of our central bank is on this matter.
On the other hand, Branko Urošević, a professor at the Faculty of Economics, mentions that unofficially, joining SEPA is a topic in Serbia as well, but it is approached very carefully for several reasons.
“I expect that work will be done on this in the coming period, and as far as I understand, there are already certain activities. Firstly, a decision needs to be made at the level of the NBS, followed by adjusting all necessary regulations. Finally, the banks need to be prepared. There are many steps, but considering the desire of many to simplify transactions as much as possible due to the Open Balkans initiative, it should be noted that there are technical and political elements that need to be carefully considered,” said Urošević for NIN magazine.
However, our interlocutor adds that “our state is very cautious about the liberalization of foreign exchange outflows and the possibility of rapidly depleting foreign exchange reserves.”
“Any form of liberalization is associated with a certain kind of risk that they are now weighing and considering. But from the perspective of any citizen and the economy, this system inevitably facilitates all transactions,” assessed Urošević.
The initiative from 2002.
The SEPA system was initially developed as an initiative of the European banking industry, which established the governing body for the SEPA project, the European Payments Council, in 2002. Initially, it was a market-driven initiative, but due to the slow migration process, it was concluded that regulatory intervention at the EU level was necessary to successfully complete the project within a reasonable timeframe.
SEPA is structured in a way that makes banking internationally seamless and fast for all participants in financial transactions, whether they are individuals, exporters, importers, buyers, or public institutions.
SEPA enables companies to use bank transfers quickly and without fees associated with conventional banking. For exporters wishing to access SEPA, for example, only an account in a bank in one of the member countries is required, and bank transfers are typically free and take no more than an hour or two between most financial institutions in the system.
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