Last Friday, the governing Council of the European Central Bank (ECB) announced in a press release that it, together with the national central banks in the euro area (the Eurosystem) have decided to start investigation into the setting up of a new service for securities settlement in the euro area.
As part of their objective in further integrating market infrastructures across, the Eurosystem, a body comprising the ECB and the euro area national central banks, has decided to start planning to extend the planned TARGET2 euro payment system to incorporate settlement services for securities transactions in central bank money. This facility, to be called Target2-Securities for the time being, will interface with TARGET2 and, like it, be fully owned and operated by Eurosystem. The ECB stated “The objective of this project is to allow the harmonised settlement of securities transactions in euro which are settled in central bank money. Synergies for the market with other facilities operated by the Eurosystem will be sought, in particular in connection with the future TARGET2 payment system.” The Eurosystem will now consult central securities depositaries and other market participants and will announce its final plans for this project in early 2007.
TARGET2 is being built by Eurosystem to replace TARGET, the second largest wholesale payment system in the world, after the US’s Fedwire, with €1.7 trillion settled every day. TARGET2 will replace the current decentralised system with a single highly flexible technical platform. It will provide a single interface which is expected to harmonise services and improve plan-European liquidity management. TARGET2 is scheduled for delivery in the second half of 2007.
| 
