Navigation Path: Home > Payments & Markets > Public consultations > Initial public consultation on the Eurosystem Single Interface
Published: 1 September 2008
Deadline: 28 November 2008
Efficient and robust market infrastructures are indispensable for the stability of the single currency, the financial system and the economy in general. Therefore, when the single currency was launched, the Eurosystem established the TARGET system for the processing of euro payments as well as the Correspondent Central Banking Model (CCBM) arrangement for the management of cross-border collateral for central bank operations.
Both TARGET and the CCBM have successfully contributed to the integration of European financial markets. In order to enable this process to continue, efforts to further the integration of the market infrastructures themselves are also necessary.
TARGET2 (T2), which commenced live operations in November 2007, is the first major result of such efforts. Other notable projects are TARGET2 Securities (T2S) and Collateral Central Bank Management (CCBM2). These three services – T2 for cash transactions, T2S for securities settlement and CCBM2 for collateral management – complement one another and together form the liquidity management “triangle”. In order to achieve the optimal exploitation of synergies, ways in which access to all three services can be provided through a Eurosystem Single Interface (ESI) are currently being considered.
For TARGET2, a comprehensive interface for functions related to payments, communication and monitoring is already in place. The communication aspects of the user requirements for T2S and CCBM2 have also been finalised. Indeed, in the feedback obtained from recent public consultations on T2S and CCBM2, users requested, inter alia, the ability to monitor their cash, collateral and securities positions using a single tool, enabling them to obtain an integrated overview of all activities performed by the three Eurosystem services, in particular T2, T2S and CCBM2.
The ESI would therefore have to be a highly efficient and harmonised communication framework granting access to Eurosystem services, for functions related to both transactions and monitoring services. The Eurosystem is currently assessing the possibility of providing access to additional operational services, which is not part of this initial public consultation.
The ESI can be regarded as an infrastructure that facilitates access to Eurosystem services. Its cost would not be charged separately, and the interface would therefore be provided in accordance with the cost and pricing principles of the services accessible via the ESI. In view of cost/benefit considerations, it is therefore of great importance that potential users indicate clearly what level of priority they assign to each aspect of the ESI, as summarised in the principles set out below. These principles are intended to establish the framework for the ESI and will – once the feedback from potential users is incorporated – form the basis for further decisions regarding its implementation.
Principle 1: The three Eurosystem operational services will be accessible via several communication channels within the ESI.
TARGET2 makes use of the SWIFT Network for communication with users at present. For T2S and CCBM2, communication channels are currently being defined. The Eurosystem selects such communication channels based on Eurosystem criteria (e.g. security, capacity, business continuity criteria, etc.) and in line with the business requirements of the services in question.
All communication channels currently used to access Eurosystem services should continue to be available in the future. Subject to further analysis, it is envisaged that the following types of communication network will offer access to the three services: proprietary networks (such as SWIFT), the public internet and dedicated links. These channels will offer different levels of service according to the differing needs of participants, who will range from low-volume to high-volume users. Some participants may consider using several channels.
Principle 2: It will be possible to use any of the supported communication channels to access any of the three Eurosystem operational services.
Users will be able to access all three services via just one of the supported communication channels, if they so wish. However, this option may have to be limited to a sub-set of service functions, a sub-group of users or certain specific purposes (e.g. contingency) for reasons of efficiency, security and cost, as well as technical and risk constraints (e.g. to ensure that high-volume users do not make excessive use of low-volume connections).
Principle 3: Each supported communication channel may offer a different set of value-added network services.
A particular communication channel may, in addition to basic communication services, also offer value-added network services. For example, SWIFT's store-and-forward, retrieval and the Y-copy function are value-added services which are currently used in TARGET2 and are highly appreciated by the user community. However, it may not be possible for all communication channels to provide the same value-added network services for technical reasons or cost/benefit reasons. Therefore, the Eurosystem may decide that a different set of value-added network services may be offered by each supported communication channels.
Principle 4: In general, each supported communication channel may offer access to the maximum functionality possible provided by the three Eurosystem's operational services.
The three Eurosystem's operational services offer a wide range of functionality options, from core functionality required by all users to more sophisticated functionality that is only employed by “advanced” users (e.g. liquidity pooling in T2 and cash prioritisation and real-time reporting on all changes in the status of instructions in T2S). Although the objective is to offer access to all functionality via all supported communication channels, this may not be possible. For example, queries that generate replies containing a large amount of data may lead to unacceptable slowdowns, or even outages of the service, if launched via a low capacity communication channel. The Eurosystem may therefore be obliged to rule out access to some functionality via some communication channels.
Principle 5: The Eurosystem will deliver a consolidated overview of a user's positions in central bank money, collateral and securities
The Eurosystem will provide users with a consolidated overview of their cash, collateral and securities positions with regard to the three services. In this respect, there are a number of options for consolidating information from the three services, which will entail different “service levels” and will have different cost implications.
One option would be to present information that is fully consistent across the different services. In this case, if an operation was ongoing which entailed processing in more than one service, the Eurosystem would not release information related to this operation until the entire operation had been completely processed in all services. An alternative would be to release information to users as at the time of the request for information. This would allow users to monitor the execution of an operation involving T2, T2S or CCBM2 in each of these services, step by step. The level of consolidation that will ultimately be offered will have to be further analysed from a cost/benefit perspective, in particular on the basis of expectations expressed by potential users.
A potential inclusion of other services in addition to T2, T2S and CCBM2 is outside the scope of this initial public consultation.
The Eurosystem invites potential users of the three Eurosystem operational services and other interested parties to provide feedback on the principles formulated above, to provide input regarding the user requirements for this project and to communicate their suggestions on how to address their needs with respect to access and the provision of consolidated information.
Comments are invited from all interested parties by 28 November 2008.
Any comments received will be made public on the internet; unless authors clearly indicate that they do not consent to such publication. Comments should be sent in English or the respective official Community language to the ECB at the following address:
European Central Bank
Secretariat Division
Kaiserstrasse 29
D-60311 Frankfurt am Main
Germany
Fax: +49 69 1344 6170
E-mail: secretariat@ecb.europa.eu
or to the respective national central bank of the Eurosystem.
