MIP OnLine - 2019

New non-central bank members of the ECB’s Market Infrastructure Board

March 2019

On 22 February 2019 the ECB issued a call for competition for new non-central bank members of its Market Infrastructure Board (MIB) in the Official Journal of the European Union.

Marc Bayle de Jessé, Director General Market Infrastructure and Payments, explains the purpose and functioning of the Market Infrastructure Board and the importance of having independent members in the Board.

The Eurosystem provides financial market infrastructure services for the settlement of payments and securities in central bank money. These services include the TARGET Services: TARGET2, TARGET2-Securities (T2S), TARGET Instant Payment Settlement (TIPS) and, in future, the Eurosystem Collateral Management System (ECMS). The market infrastructure and platforms for these services form the backbone of the European financial market.

The MIB is tasked by the Governing Council with the operation and management as well as the further development of the Eurosystem’s market infrastructure services. Combining a lean structure with diversity and stakeholder involvement, the MIB has two non-central bank members with experience in the payments and securities industry.

The advantages of having such a governance structure, which brings together the expertise from central bank operations and policymaking with hands-on practitioners’ market experience, are manifold. The development and implementation of market infrastructure projects requires a high degree of rigour, professionalism and focus throughout the projects. In fact, developing and operating the European market infrastructure requires the qualities of a long-distance runner: stamina and mental strength. The T2S project is a prime example of this. From preparation to migration, it was a run that took seven years. To go through all the stages from preparation to development and testing and, ultimately, to migration, a lot of perseverance and determination were needed.

At the same time, continuous stakeholder involvement is a key factor to ensure that the market infrastructure and services under development meet the needs of the financial market. Being able to draw on the expertise and experience of potential and actual users is a big asset that helps to overcome the hurdles and challenges encountered during any project. Having independent members with industry experience broadens the perspective and ensures a focus on the bigger picture.

In the coming years, the MIB has got plenty of work in store. The full deployment of TIPS, which was developed and implemented within a very tight time frame from June 2017 to November 2018, will be a decisive factor in the roll-out of pan-European instant payment products and services based on the SEPA Instant Credit Transfer. The consolidation of TARGET2 and T2S will mark a major upgrade for the TARGET2 real-time gross settlement (RTGS) services, facilitate enhanced liquidity management procedures for market participants across the Eurosystem, reduce operational costs and enhance cyber security. The development of a Eurosystem Collateral Management System will establish a harmonised platform for collateral operations across the Eurosystem.

Overall, the Eurosystem’s goal is to create a truly single financial market in Europe. In such a single market, payments, securities and collateral could be moved safely and efficiently between market participants in different countries without friction or restrictions. The MIB plays an active role in the thinking and planning regarding how best to remove the remaining barriers and obstacles that still exist in some segments of the market due to fragmented legacy standards, structural constraints and complex and diverse market practices.

Non-central bankers with experience and expertise in payments and/or financial market infrastructures who are interested in playing an active role in the work and decision-making of the MIB are invited to refer to the call for competition in the Official Journal for further information.