The Eurosystem promotes the safety and efficiency of payment, clearing and settlement systems under its oversight mandate.
These systems play important roles not only in the stability and efficiency of the financial sector and the euro area economy as a whole, but also in the smooth conduct of the single monetary policy of the euro area and in the stability of the single currency.
The Eurosystem’s oversight mandate also covers electronic payment instruments, schemes and arrangements, as their use requires a high degree of safety and efficiency to maintain confidence in the euro and promote an efficient economy.
- Eurosystem oversight report 2020
- Eurosystem oversight policy framework
- CPSS-IOSCO Principles for financial market infrastructures (PFMIs)
Scope of oversight
Eurosystem oversight covers different types of financial market infrastructures and other entities, as well as electronic payment instruments, schemes and arrangements:
- payment systems (systemically important payment systems and non-systemically important payment systems)
- securities settlement systems and central counterparties
- electronic payment instruments, schemes and arrangements
- other infrastructures and service providers
The Eurosystem has set out its oversight objectives for safety and efficiency in specific oversight regulations, principles, guidelines and recommendations which are relevant for the overseen infrastructures and entities, as well as for electronic payment instruments, schemes and arrangements.
In conducting its oversight tasks, the Eurosystem follows a three-step process:
- collecting relevant information
- assessing the information against the oversight objectives
- inducing change where necessary
Roles within the Eurosystem
Oversight responsibilities are assigned to the Eurosystem, which comprises the ECB and the national central banks (NCBs) of the euro area.
To achieve effective and efficient oversight, the Eurosystem shares these responsibilities in a way that enables it to benefit from its decentralised structure while ensuring that its oversight activities are coordinated and its policy stance consistently applied throughout the euro area.
To conduct oversight of individual financial market infrastructures, the Eurosystem assigns primary oversight responsibility to the central bank that is best placed to undertake this role, either because of its proximity to the overseen entity (for example, where the system is legally incorporated in its jurisdiction), or because of national laws that attribute specific oversight responsibilities to the central bank concerned. The latter is typically the case for systems, schemes or arrangements with a clear national anchor – those that are legally incorporated in a jurisdiction or serve that particular national market.
For systems that have no national anchor, the NCB of the country where the system is legally incorporated is responsible for oversight, unless the Governing Council of the ECB decides otherwise and assigns the primary oversight responsibilities to the ECB, as is the case for certain systemically important payment systems. If the oversight activities have been carried out by an NCB, the ECB will conduct oversight jointly with that NCB.
For payment schemes and arrangements that have no national anchor – for example, where the scheme or arrangement provides pan-European services or is incorporated outside the euro area – the lead overseer is the ECB. In cases where the pan-European scheme/arrangement has a traditional oversight or supervisory relationship with an NCB going back at least three years, the ECB jointly conducts oversight with that NCB.