Catalonia is not a part of the SEPA Area; it has no central bank and so it has no Eurosystem member.
Its financial infrastructure is, however, SEPA-compliant, meaning domestic and cross-border high-value payments are made and received through TARGET2, domestic low-value through Iberpay, and cross-border low-value through Iberpay and EBA STEP2.
Bank branches are identified through BICs, and accounts through IBANs. Getting a payment to and from bank accounts is enabled by routing tables, which sit behind all of TARGET, Iberpay and EBA STEP2.
The entry points are the main offices of the Spanish banks, and settlement occurs over the TARGET2 accounts of the Spanish banks at Banca d’Espana, Spain’s Eurosystem member.
In other words it is all controlled from Madrid, via the main offices of the Spanish banks or by the Banca d’Espana.
Under SEPA rules all accounts in Catalonia must be “reachable”, and this “reachability” is determined through the IBANs and BICs, and the routing tables behind them.
All that Madid has to do is to take down from the routing tables the BICs of every bank branch in Catalonia, and then every bank account held in those branches – identified by an IBAN – becomes unreachable for electronic euro payments:
- Payments with both endpoints in Catalonia;
- Payments with one endpoint in Catalonia and the other elsewhere in Spain;
- Payments with one endpoint in Catalonia and the other elsewhere in the EU.
Merchants would not be able to receive proceeds of card sales on Mastercard, Visa and any other networks because, even if the acquirer would accept the transaction, the card issuer would not be able to settle proceeds to a bank account in Catalonia.
Banca d’Espana, as Spain’s Eurosystem member, is the distributor of Euro banknotes. They might not be able to restrict Spanish banks filling their ATM networks in Catalonia with notes trucked in, but any independent owners of ATM estates in Catalonia could be starved, as well as regional Catalonian banks. Banknotes in circulation would continue to circulate, but begin with usage to fail to be of ATM quality.
Catalonia cannot protest this in any court because it is not a recognised legal person.
Catalonia is thus cut off from all the main types of payment transaction, and thus from the results in terms of domestic and cross-border trade, international travel connections and tourism.
These are the penalties of a UDI in a modern networked society, particularly in the Eurozone. It beggars belief that the Catalan government are so ignorant of the basics of money flows as to not realise that their actions severely risk the ability of Catalan citizens to put bread on the table.
Perhaps they will come up with a Cata-crypto-currency into which citizens would have to convert their euro: good luck with that.