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 payment instruments, as their usage 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, instruments and entities:
- payment systems (systemically important payment systems and non-systemically important payment systems)
- securities settlement systems and central counterparties
- payment instruments
- other infrastructures and service providers
The Eurosystem has set out its oversight objectives for safety and efficiency in specific oversight regulations, standards, guidelines and recommendations, as relevant for the overseen infrastructures, instruments and entities.
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 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.