Transcript GENERAL FRAMEWORK DNB-CEF WORKSHOP ON PAYMENT …

TARGET2
De Nederlandsche Bank
Richard Derksen
2nd Conference Financial Sector of
Macedonia on Payments and Securities
Settlement Systems
Ohrid
30 June 2009
De Nederlandsche Bank
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Contents
TARGET
 Scope and framework TARGET2
 Single Shared Platform
 Project planning
 Migration

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TARGET

TARGET
 Trans-European
 Automated
 Real-time
 Gross settlement
 Express
 Transfer system
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The ESCB payment system
European
Central
Bank
NCB-A
NCB-B
Interlinking
bank A
bank B
bank C
bank D
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TARGET1
ECB
NCB
ILC
NCB
ILC
NCB
ILC
NCB
ILC
ILC
NCBILC
NCBILC
ILC
TARGET
Interlinking
Network
• Expensive
NCB • Inflexible
• Different pricing
NCB
• Different products /
NCB services
• Different standards
ILC
ILC
NCBILC
ILC
ILC
NCB
NCB
ILC
ILC
ILC
NCB NCB
NCB
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From TARGET to TARGET2
Swift Net Services
Bank A
Bank B
Interlinking via FIN
NCBs
Ancillary systems
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TARGET2 platform
One central platform for NCBs for the real time gross
settlement of large value payments
The central TARGET2 platform, called Single Shared
Platfom (SSP), is built by 3 NCB´s (3CB):
Bundesbank, Banque de France and Banca d´Italia
The platform offers some mandatory and some optional
modules.
Operational per 19 November 2007 (group 1)
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TARGET2 in TARGET2
Europe
Countries on TARGET2
---- of which €
Other EU-countries
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TARGET2
TARGET2 offers:
 High availability
 Uniform pricing
 Uniform functionality
 Harmonisation
 Advanced tools for liquidity management
 Ready for new countries
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TARGET2: Operations

All RTGS operations may be processed in TARGET2
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All types of operations
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individual operations settled in real-time and in central bank money
no exclusion according to amount or type of operations
Wholesale payments are a main goal for TARGET2
credit transfers
direct debits (limited usage)
mandated payments
All types of business

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payments between market participants
central bank operations
settlement operations of ancillary systems
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TARGET2 operational day
18:45
19:30
22:00
01:00
06:45
07:00
17:00
18:00
18:45
business
day (d+1)
TARGET business day (d)
Calendar day (d-1)
Calendar day (d)
9
1
2
3
4
3
5
6
7
8
1
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TARGET2 operational day
Purpose of the different phases:
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Start-of-day (1 & 2)
Night-time processing (3)
Technical maintenance window (4)
Preparation for day trade phase (5)
Day trade phase I (6)
Day trade phase II (7)
End-of-day (8 & 9)
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Payment interface
- FIN Copy SWIFTNet FIN
Bank A
MT 103(+) / 202 / 204
Participant Interface (Y-copy)
mandatory
Booking
instruction
Bank B
SSP country
MT 097
MT 096
SSP country
MT 011
MT 012
MT 103(+) / 202/204
MT 019
PM
Acknowledgement
either / or
optional
Payment Processing
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Liquidity pooling - Virtual account
Credit institution e.g.
Bank A1
Credit institution e.g.
Bank A2
Credit institution
Bank A3
Group account
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virtual balance : balance on (single) accounts + credit lines
possibility to „use“ this position by each group account
holder
booking on the single accounts (not on the virtual account)
only intra-day: „levelling“ off at the end of day mandatory De Nederlandsche Bank
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Single Shared Platform
Centralized solution: single platform, no interlinking
 central payments processing: DE, IT
(workload distribution between regions)
 central datawarehouse and customer services: FR
Region 1
Region 2
Region 3
SITE A
SITE C
SITE E
SITE B
SITE D
SITE F
payments and accounting
services
customer related
services
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Single Shared Platform
REGION 1
Live
SITE A
SITE B
Test & Training
(T&T)
P
P
Asynchronous
remote
copy
Synchronous remote copy
Hot back-up
Periodic
Region
Rotation
S
REGION 2
SITE C
Synchronous remote copy
S
SITE D
Hot back-up
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Ancillary systems settlement
For integrated model:
liquidity transfer
SSS
For interfaced model:
real-time settlement
SSS
Securities accounts
Other NCB Cash
settlement accounts
RTGS
Securities accounts
NCB
environ
ment
RTGS
NCB
environ
ment
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Stakeholders TARGET2
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Migration groups
Group
composition aimed at minimising project risk, reducing effect
on level playing field and limiting the costs for central banks and users
 Data migration: 19 November 2007, 18 February 2008, 19 May 2008
Group 1
Austria
Cyprus
Germany
Latvia
Lithuania
Luxembourg
Malta
Slovenia
Group 2
Belgium
Finland
France
Ireland
Netherlands
Portugal
Spain
Group 3
Denmark
Estonia
ECB
Greece
Italy
Poland
Group 4
Not needed
Reserved
for
contingency
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TARGET2 user testing
Objective
Check readiness from business, operational and
procedural viewpoints
Implementation
Usage of a separate user test environment
Several testing phases with different purposes
Connectivity
testing
Interoperability
testing
Country
testing
Business
Day testing
Changeover
Go
live
User Testing
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Pricing

Objectives: cost recovery, competitiveness and
broad access

Pricing of transactions: pricing scheme with a
monthly fee (100 euro or 1.250 euro) plus
transaction fee of between EUR 0.125 and 0.80

Optional services (e.g. liquidity pooling and
services related to ancillary systems) are priced
separately
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Some statistics
Monthly Avg per National Central Bank for
Jan - May 2009
Country
code
AT
BE
CY
DE
DK
EE
ES
EU
FI
FR
GR
IE
IT
LT
LU
LV
MT
NL
PL
PT
SI
SK
Total
Volume
3.493
8.543
344
173.853
951
72
32.235
337
1.729
27.238
4.748
4.782
32.118
90
3.129
571
56
34.444
727
2.805
2.946
610
Value (EUR)
34.593.200.000,00
156.314.700.000,00
1.140.200.000,00
1.125.578.200.000,00
19.106.500.000,00
309.000.000,00
727.368.700.000,00
56.079.500.000,00
38.265.100.000,00
391.370.000.000,00
32.580.300.000,00
28.968.900.000,00
357.615.300.000,00
386.900.000,00
71.967.600.000,00
761.200.000,00
424.400.000,00
266.156.500.000,00
525.400.000,00
10.573.000.000,00
2.086.700.000,00
4.396.800.000,00
335.821
3.326.568.100.000,00
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Some statistics
200.000
1.200.000.000.000,00
180.000
1.000.000.000.000,00
160.000
140.000
800.000.000.000,00
120.000
100.000
600.000.000.000,00
Volume
Value (EUR)
80.000
400.000.000.000,00
60.000
40.000
200.000.000.000,00
20.000
0
0,00
AT BE CY DE DK EE ES EU FI FR GR IE
IT
LT LU LV MT NL PL PT SI SK
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Summing up
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TARGET2 is a sort of 3rd wave of Euro
Impact for national markets is big, but provides
them (and foreign banks) directly with all benefits
of a technically centralized platform ( legally it is
a decentralized system)
One pot of liquidity, one window for info on all
TARGET payments
Migration will be challenging and require a lot of
testing and hard work
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