The ongoing T2/T2S consolidation programme promises a ‘big bang’ moment for the industry
Vision 2020 is a serviceable title that has been attached to disparate projects and initiatives from various organisations. For the Eurosystem – comprising the European Central Bank (ECB) and the national central banks of EU member states whose common currency is the euro – Vision 2020 represents the next step of evolution towards a more integrated European financial market infrastructure.
The Eurosystem’s current market infrastructure enables the exchange of securities, collateral and liquidity between financial market counterparties. Liquidity, to quote the ECB, is “the fuel to effectively facilitate the exchange”.
Vision 2020 aims to generate benefits for the system from further integration, including greater efficiency, improved security, full use of technologies and facilitating usability. Currently, fund transfers between the EU’s banks are effected through the second iteration of Trans-European Automated Real-time Gross Settlement Express Transfer, aka TARGET2 (T2). Introduced in November 2007, T2 is used by more than 1,700 banks to effect high daily volumes of euro transactions. A similar dedicated platform for securities transactions, TARGET2-Securities (T2S), was launched by the Eurosystem in July 2008.
As the ECB observes: “TARGET2 has been running smoothly for over a decade, ensuring safety and efficiency in European payments. However, payments have changed significantly in the meantime due to technological developments, regulatory requirements and changing consumer demands.”
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