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De Nederlandsche Bank
TARGET2
Nynke Doornbos
3rd Macedonian Financial Sector
Conference on Payments and Securities
Settlement Systems
29 June 2010
De Nederlandsche Bank
Eurosysteem
Agenda TARGET2
TARGET
 Scope and framework TARGET2
 TARGET2 operational day
 Single Shared Platform

De Nederlandsche Bank
Eurosysteem
TARGET

TARGET
 Trans-European
 Automated
 Real-time
 Gross settlement
 Express
 Transfer system
De Nederlandsche Bank
Eurosysteem
History: the ESCB payment system
European
Central
Bank
NCB-A
NCB-B
Interlinking
bank A
bank B
bank C
bank D
De Nederlandsche Bank
Eurosysteem
History: TARGET(1)
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
De Nederlandsche Bank
Eurosysteem
From TARGET to TARGET2
Swift Net Services
Bank A
Bank B
Interlinking via FIN
NCBs
Ancillary systems
De Nederlandsche Bank
Eurosysteem
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 (in 3 groups)
De Nederlandsche Bank
Eurosysteem
TARGET2 in Europe
Countries on TARGET2
---- of which €
Other EU-countries
De Nederlandsche Bank
Eurosysteem
Functionalities in T2
De Nederlandsche Bank
Eurosysteem
TARGET2
TARGET2 offers:
 High availability
 Uniform pricing
 Uniform functionality
 Harmonisation
 Advanced tools for liquidity management
 Ready for new countries
De Nederlandsche Bank
Eurosysteem
TARGET2: Operations

All RTGS operations may be processed in TARGET2




All types of operations




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



payments between market participants
central bank operations
settlement operations of ancillary systems
De Nederlandsche Bank
Eurosysteem
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
De Nederlandsche Bank
Eurosysteem
TARGET2 Operational day
Purpose of the different phases:







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)
De Nederlandsche Bank
Eurosysteem
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
De Nederlandsche Bank
Eurosysteem
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
De Nederlandsche Bank
Eurosysteem
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
De Nederlandsche Bank
Eurosysteem
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
De Nederlandsche Bank
Eurosysteem
Stakeholders TARGET2
De Nederlandsche Bank
Eurosysteem
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
De Nederlandsche Bank
Eurosysteem
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 between EUR 0.80 and 0.125.

Optional services (e.g. liquidity pooling and
services related to ancillary systems) are priced
separately
De Nederlandsche Bank
Eurosysteem
Liquidity pooling - Virtual account
Credit institution e.g.
Bank A1
Credit institution e.g.
Bank A2
Credit institution
Bank A3
Group account




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
Eurosysteem
Volume and value turnover T2
De Nederlandsche Bank
Eurosysteem
Actual volume and value
turnover T2
De Nederlandsche Bank
Eurosysteem
Main indicators in 2009
De Nederlandsche Bank
Eurosysteem
NL
Summary
Commercial banks directly benefit of a
technically centralized platform (legally it is a
decentralized system)
 One pool of liquidity, one window for info on all
TARGET payments

De Nederlandsche Bank
Eurosysteem