Today, the Eurosystem – the European Central Bank (ECB) and the 16 national central banks of the euro area – has signed a Memorandum of Understanding with 27 European central securities depositories (CSDs). The Memorandum of Understanding shows the commitment towards the TARGET2-Securities (T2S) project and sets out the mutual obligations and responsibilities of the CSDs and central banks in preparation for the next important stage of the project, which will involve a contractual agreement on building T2S.
The CSDs in all the euro area countries, as well as nine non-euro area CSDs in Denmark, Estonia, Latvia, Lithuania, Romania, Sweden, the United Kingdom, Iceland and Switzerland, signed the Memorandum of Understanding. The CSDs in Denmark, Lithuania and Sweden – with the consent of their central banks and the support of their markets – also confirmed their intention to provide for the settlement of their national currencies in T2S, in addition to settlement in euro.
The signing of the Memorandum of Understanding is an important milestone in preparing for the development phase of the project, providing the basis for discussions on the formal contractual agreement between the CSDs and the Eurosystem in the coming months. It is planned to finalise a formal contractual agreement in the first half of 2010.
T2S will constitute a major step forward in the delivery of a single integrated securities market for financial services, thus reinforcing the Lisbon strategy and, in particular, the Code of Conduct on Clearing and Settlement and harmonisation efforts through the Giovannini process. T2S will create a single, borderless pool of pan-European securities, as well as provide a core, neutral, state-of-the-art settlement process. Market users will be able to access these assets through CSDs in a way that can accommodate – rather than perpetuate – national and regional differences, and that already brings to bear agreed harmonisation measures in several key areas.
The T2S project is currently in its specification phase, involving the preparation of the documentation related to the user requirements and the design of the system, as well as the preparation of the contractual arrangements with the CSDs. The development phase will start in early 2010. T2S is planned to go live in June 2013.
Further information is available from the T2S section of the ECB’s website www.ecb.europa.eu/paym/t2s/
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