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 continues to meet the needs of the market, stays ahead of cyber security challenges and keeps 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)
A service for instant payment settlement across Europe in central bank money.
Instant payments are electronic retail payment solutions available around the clock, 365 days per year. They are settled immediately meaning that the money is moved from the payer’s account to the payee’s account within seconds.
The Eurosystem aims to ensure that the growing demand for instant payments is met at European level and to avoid national solutions reintroducing fragmentation in Europe.
The Eurosystem has 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 defined and specified 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.
Public consultations on the user requirements were run in early 2017 and a final decision on whether the project will continue will be taken in June 2017.
Consolidation of TARGET2 and T2S
The Eurosystem is exploring synergies across its market infrastructures.
The Eurosystem owns and operates financial market infrastructures for the settlement of payments (TARGET2) and securities (TARGET2-Securities, or T2S). It is investigating the possible consolidation of their technical and functional aspects so that TARGET2 end users can also enjoy the benefits of the state-of-the-art features offered by T2S. The Eurosystem is also evaluating whether TARGET2 should offer new services in response to changing market demands. The investigation follows 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. A public consultation ran between May and June 2017.
Eurosystem collateral management system
The aim is to harmonise the Eurosystem's collateralisation techniques and procedures.
The Eurosystem provides credit only against adequate collateral. Typically, collateral refers to either marketable financial securities, such as bonds, or other types of assets, non-marketable assets or cash.
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.
In the course of 2017 the Eurosystem will define the user requirements and assess the business case for, and the costs of, developing a new system. An internal Eurosystem task force has been set up and market participants will be consulted on matters that affect them.
Distributed ledger technology
The ECB is exploring the impact of new technologies on financial market infrastructures.
The financial industry is experiencing significant changes due to technological innovation. Distributed ledger technology (DLT) is among the new solutions which are considered to have great potential. A distributed ledger is a record of information, or database, put together using complex algorithms – to ensure the security and integrity of the data – and shared across a network. The members of the network may have different permission rights to access and modify the ledger.
The ECB has an interest in new technological developments as they could affect its activities in the area of market infrastructure and payments.
As operator of the payment system TARGET2 and the securities settlement platform T2S, the ECB is constantly exploring new ways to embrace efficiency and innovation in its market infrastructure services.
Assuming the role of catalyst for financial market integration in the EU, the ECB aims to ensure that the emerging DLT-based solutions do not hamper market integration by creating new fragmentation.
As an overseer promoting the safety and efficiency of market infrastructures and payment instruments, the ECB needs to have a solid understanding of how the adoption of DLT could potentially affect the entities it monitors.
The ECB has also launched a joint research project with the Bank of Japan to capitalise on the experiences both institutions have in exploring and testing the possible uses of DLT.
Secured financing transactions data store
The data store will support EU central banks in managing financial stability risks and monitoring 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 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 European System of Central Banks (ESCB) is investigating whether to build a data store for SFTs. 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.
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.