PRESS RELEASE

Enhancements to the correspondent central banking model (CCBM)

17 December 2003

The Eurosystem – the twelve national central banks of the euro area and the European Central Bank (ECB) – introduced the correspondent central banking model (CCBM) at the start of Stage Three of Economic and Monetary Union. The CCBM ensures that all assets eligible for use either in monetary policy operations or to obtain liquidity in the Trans-European Automated Real-time Gross settlement Express Transfer system (TARGET) are available to all of Eurosystem counterparties, regardless of where the assets or the counterparties are situated. The CCBM is a medium-term solution that will continue to operate until adequate market solutions become available throughout the euro area and the European Union.

As a result of the efforts both of the central banks and of market participants, the average processing time will amount to little more than an hour, provided that instructions are submitted correctly by counterparties and that the securities settlement system used can settle the operation without delay.

The central banks of the Eurosystem, in fact, aim to improve on the service level of the CCBM by implementing, in January 2004, a time benchmark of 60 minutes to perform their internal CCBM procedures. This benchmark will apply to normal operating conditions.

Moreover, the European Banking Federation, the European Savings Bank Group and the European Association of Co-operative Banks have endorsed "best practices for market participants involved in CCBM operations", defining, in particular, a compatible time benchmark for participants to perform their internal CCBM-related procedures. The best practices will also come into force in January 2004.

Despite these efforts, however, the Eurosystem still favours the development, in the medium to long term, of market solutions for the cross-border use of collateral.

Details of the "best practices for market participants involved in CCBM operations" and of the new features of the CCBM can be found in the ECB publication "Correspondent central banking model – Procedures for Eurosystem counterparties (September 2003)" which is available on the ECB's website at http://www.ecb.europa.eu/pub.

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