The European Central Bank (ECB) has named four key payment systems – Target2, Euro1, Step2-T and Core(Fr) – as “systemically important”, and as a result they will be subject to new regulations covering large-value and retail payment systems in the euro area operated by both central banks and private entities.
The ECB says the aim is to promote the “smooth operation of safe and efficient payment systems” through strong management of legal, credit, liquidity, operational, general business, custody, and investment risks. In identifying systemically important payment systems, the ECB looked at the value of payments settled, market share, cross-border relevance and provision of services to other infrastructures. If a system is deemed to meet at least two of these four criteria it makes the list.
Target2, operated by the Eurosystem; Euro1 and Step2-T, both run by EBA Clearing; and the French bank joint initiative Core(Fr) have been identified. The list will be reviewed annually based on updated data.
Benoît Coeuré, member of the executive board of the ECB, said: “With this regulation, Europe is consolidating international practice for the oversight of systemically important payment systems into EU law, as with past efforts for other financial market infrastructures, such as the European Market Infrastructure Regulation for the supervision of central counterparties and trade repositories, and the ongoing regulatory initiative for central securities depositories.”