The Eurosystem engages in a number of initiatives which aim to promote efficiency, innovation and transparency and ultimately achieve greater integration in financial markets in Europe. In line with its strategy, the Eurosystem is investigating ways to enhance its financial market infrastructure so that it can meet today’s cyber security challenges and keep up with the latest technological developments.
On this page you can find information about the initiatives that are currently under investigation. The investigation is used either to consult users on the need for new services or to explore the potential of new technologies.
TARGET Instant Payment Settlement (TIPS)
The Eurosystem aims to ensure that the growing demand for instant payments is met without national solutions being implemented that reintroduce fragmentation in Europe. It has therefore launched an investigation to assess market participants’ needs for instant payment settlement services with operating hours up to 24/7/365.
A task force has been set up with the mandate to define and specify the user requirements for a potential new TARGET instant payment settlement service. The members of the task force come from banks active in retail payments, automated clearing houses and euro area national central banks.
Consolidation of TARGET2 and T2S
The aim here is to consolidate the technical and functional aspects of real-time gross settlement (RTGS) services so that TARGET2 end users can also enjoy the benefits of the state-of-the-art features offered by T2S. Moreover, the Eurosystem is evaluating whether TARGET2 should offer new services in response to changing market demands. The investigation will follow up on the market feedback gathered during the consultation on the future of RTGS services.
A task force on future RTGS services has been set up to discuss the impact on TARGET2 participants, and to define and specify the user requirements for the possible new RTGS services. The members of the task force come from banks that actively use TARGET2 and national central banks both within and outside the euro area.
Eurosystem collateral management system
The Eurosystem is investigating the business case for a shared system for the mobilisation and management of collateral used in Eurosystem credit operations. Areas where further harmonisation could be achieved will also be assessed in order to increase the efficiency of the common system, should it be developed. The Eurosystem will define the user requirements and assess the business case for and the costs of developing a new system in the course of 2017. An internal Eurosystem task force has been set up and market participants will be consulted on matters that would affect them.
Distributed ledger technology
The financial industry is experiencing significant changes due to technological innovation. The ECB supports innovation if the developments are safe, efficient and foster integration rather than reintroduce fragmentation in the financial markets. Distributed ledger technology (DLT) is among the new solutions which have great potential. A task force made up of market experts on financial innovation and cyber security has been appointed to explore the impact of DLT on the post-trade industry.
Secured financing transactions data store
The European System of Central Banks (ESCB) is investigating whether to build a data store for secured financing transactions (SFT). The aim is to enable central banks in the EU, and possibly EU regulators, to obtain, store and analyse SFT data as of 2018. The data store would give EU authorities an additional tool to manage financial stability risks and monitor trends.
SFTs are financing operations that involve the posting of a guarantee, or collateral, which is returned at the end of the operation to the institution requesting financing.
- repurchase transactions;
- securities or commodities lending and securities or commodities borrowing;
- buy-sell back transactions or sell-buy back transactions;
- margin lending transactions.
The data store will make the SFT market more transparent by providing detailed information on transactions concluded both inside and outside the banking system. This includes the shadow banking system: investment vehicles, funds, insurance firms, finance companies, etc.
The SFT market segment is of critical importance to the European central banks, especially for the monitoring of risks to financial stability, the micro-prudential supervision of financial firms and the conduct of monetary policy.
The data store project is part of the EU’s response to the recommendations on shadow banking risks set out by the Financial Stability Board in 2013. It derives from a new EU Regulation on the reporting and transparency of securities financing transactions that is due to enter into force by the end of 2015. Under the Regulation, SFT market participants will have to report SFTs to (authorised) trade repositories, who will in turn make the data available to the ESCB and the other authorities and regulators listed in it.
In developing the draft technical standards, the ESCB will cooperate with the European Securities and Markets Authority (ESMA) to ensure that its needs are taken into account.