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May 30, 2018

ECB published a report providing a summary of the self-assessment of the Trans-European Automated Real-time Gross settlement Express Transfer (TARGET2) system against the principles for financial market infrastructures (PFMIs). This summary is an accurate reflection of the self-assessment of TARGET2 as of January 01, 2018, against the systemically important payment systems (SIPS) Regulation.

The report reveals that, since the last assessment, TARGET2 has been regularly enhanced, mainly through minor technical and functional releases and through the 2017 introduction of the “ASI-6 real-time” settlement model, which supports ancillary systems offering real time payments. This update has not resulted in any changes that are significant for this self-assessment. The main risks to which TARGET2 is exposed are legal, credit, liquidity, operational/information security, custody, and general business risks. For credit and custody risks, the operator applies Eurosystem risk management frameworks, which are primarily set for monetary policy operations. The operator, therefore, has no influence on these frameworks. The other risks are all managed through different frameworks, which were developed by the operator in the specific context of TARGET2 and are aimed at identifying, measuring, monitoring, and mitigating these risks.

The TARGET2 yearly releases allow for the filling of the identified gaps and improvements to the efficiency of the system. TARGET2 is, as any other Systemically Important Payment System, overseen by the oversight function against the SIPS Regulation. Each TARGET2 national component is then assessed by the national competent oversight authority. TARGET2 was last assessed against the SIPS Regulation in 2015. Previously, TARGET2 had been assessed against the “Core Principles for Systemically Important Payment Systems” and “Business Continuity Oversight Expectations.” TARGET2, which is the real-time gross settlement (RTGS) system operated by the Eurosystem, settles euro-denominated payments on an individual basis, in real time and in central bank money with immediate finality.

 

Related Link: Disclosure Report (PDF)

Keywords: Europe, EU, PMI, FMI, RTGS, Target2, SIPS Regulation, Self-Assessment, PFMI, ECB

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