With TARGET2-Securities, the ECB has just created a powerful platform for settling securities transactions in central bank money. Not only were basic components implemented, but also new functions in the area of (intraday) liquidity management and (auto)collateralization. As a result of the changes already adopted by the ECB as part of the T2/T2S consolidation, liquidity management in particular is now a key focus. The future Real-time Gross Settlement Service (RTGS, now TARGET2) will also offer a variety of options for managing payment transactions in a liquidity-optimized manner - both for managing the RTGS account and across modules for T2S and TIPS. In the process, the account structure within the Eurosystem will change: liquidity will be managed via a central account in the future. For additional information, please read our blog article on this topic: CENTRAL LIQUIDITY MANAGEMENT
The effects of T2/T2S consolidation at the banks and financial institutions affected therefore go far beyond the changeover to the ISO 20022 message standard: Technical and organizational processes in payment transactions and at the interface to liquidity management will also change. Challenges - and significant opportunities - will also arise from the introduction of TIPS, which enables instant payments to be processed in central bank money.
In view of already defined milestones for the TARGET2/T2S consolidation and a tight schedule until the go-live in November 2022, banks and financial institutions see themselves forced to act already now and to initiate the necessary conversion activities in payment transactions and liquidity management. syracom is already supporting several institutions in introducing T2S, consolidating the T2/T2S platform and using opening synergy effects.
Please also read our blog article on this topic: THE CONSOLIDATION OF TARGET2 AND T2S CONTINUES TO PROGRESS
Head of thematic area
Payments and Treasury