2006年-ECB欧洲央行_The_evolution_of_large-value_payment_systems_in_the_euro_area_9页_200kb

Summary of the Evolution of Large-Value Payment Systems in the Euro Area

Core Content

Large-value payment systems (LVPS), also known as wholesale systems, are essential for the smooth functioning of financial markets and monetary stability. These systems typically handle high-value, urgent transactions between banks or financial market participants, ensuring timely and secure settlement. The evolution of LVPS in the euro area has been closely linked to the introduction of the euro and the development of the Eurosystem's monetary policy framework.

Main Trends and Developments

Global Evolution of LVPS

• 1970s: Payment systems were largely paper-based, with manual processing and long settlement times.
• 1980s–1990s: The shift to electronic processing began, reducing costs and increasing transaction volumes. Net settlement systems were still common, but real-time gross settlement (RTGS) systems started to emerge due to systemic risk concerns.
• Lamfalussy Report (1990): Highlighted the need for prudential rules to mitigate credit and liquidity risks in net settlement systems, leading to the adoption of RTGS systems in many countries.

Euro Area Evolution

• 1990s: The development of LVPS in the EU was driven by two objectives: responding to the Lamfalussy report and preparing for the European Monetary Union (EMU).
• 1999: The euro was introduced, leading to the creation of TARGET, the first euro area-wide RTGS system. This system replaced the need for correspondent banking in cross-border transactions within the euro area.
• Pre-Euro Systems: Before the euro, several LVPS operated in legacy currencies, such as EAF (Germany), PNS (France), SPI (Spain), and POPS (Finland). These systems were either net or hybrid settlement systems.

Key Systems in the Euro Area

• TARGET: A real-time gross settlement system that became the primary LVPS in the euro area. It eliminates credit risk by settling payments in central bank money and is used for interbank and high-value customer payments.
• EURO1: A private net settlement system that processes a significant number of transactions, but with lower average values compared to TARGET. It is used for non-critical interbank payments.
• CLS (Continuous Linked Settlement): A global system introduced in 2002 for foreign exchange transactions, which allows for simultaneous settlement of both currency legs in a PVP (Payment versus Payment) mode, reducing foreign exchange settlement risk.
• EuroSIC and EuroCHATS: Non-euro area systems that process euro transactions using commercial bank money, with relatively low volumes and values compared to TARGET.

Market Share and Traffic Distribution

• In 2005, TARGET accounted for 89% of the value and 59% of the number of payments processed through all euro LVPS.
• The average value of a TARGET payment was €6.4 million, while that of a EURO1 payment was €0.9 million.
• TARGET traffic increased by 10.5% in volume and 12.8% in value from 1999 to 2005, while EURO1 saw a 17.4% increase in volume, but a decline in value due to its focus on smaller-value transactions.

Future Evolution: TARGET2

Strategic Objectives

• Harmonisation: TARGET2 will provide a single user interface and standardised message formats, with SWIFT as the network service provider.
• Consolidation: It will replace the "system of systems" architecture with a single shared platform, reducing complexity and enabling better liquidity management.
• Robustness: The system will be based on a "two sites - two regions" model, ensuring business continuity and resilience in case of failures.
• Cost Efficiency: Consolidation and standardised features will reduce overall costs, making the system more attractive for both large and small participants.

Expected Outcomes

• Consolidation of Systems: The migration to TARGET2 is expected to lead to the closure of some existing systems, such as the French PNS system.
• Enhanced Liquidity Management: Banks will benefit from liquidity-saving mechanisms such as sender limits, payment prioritisation, and intraday pooling.
• Increased Competition: The "same service, same price" principle will reduce pricing disparities among national systems, fostering competition.
• Integration with EU Expansion: TARGET2 was developed to accommodate the enlargement of the EU and euro area, avoiding the fragmentation that would have occurred with TARGET1.

Conclusion

The introduction of the euro in 1999 marked a significant turning point in the development of large-value payment systems in the euro area. It led to the creation of TARGET, which became the dominant LVPS, and the gradual phasing out of older systems. The future evolution of these systems is guided by the development of TARGET2, which aims to enhance efficiency, reduce risks, and promote financial integration across the euro area.