European governance framework
How are the various Eurosystem projects for developing payment systems organized and coordinated? The Project Organisational and Control Plan (POCP) of the European Central Bank (ECB) defines the internal governance for all Eurosystem infrastructure projects. It is based on three levels:
- Level 1 (L1) comprises the decision-making bodies of the ECB (the Governing Council and Executive Board), i.e. the infrastructure owners, who are responsible for making all the strategic decisions related to the projects (for example, financial and planning issues and risk assessment and mitigation);
- Level 2 (L2) comprises all the National Central Banks (NCBs) of the European System of Central Banks (ESCB)/Eurosystem and is responsible for the decisions delegated to it by L1, as well as for the day-to-day management of the projects, which must be completed within timeframes and at costs defined by L1;
- Level 3 (L3) comprises the central banks that provide services on behalf of the entire ESCB/Eurosystem, as coordinated by the ECB, and is responsible for developing and operating the systems once they are up and running. For TARGET2, this level includes the central banks of France, Germany and Italy (known as the 3CBs); for TARGET2-Securities, the 3CBs became the 4CBs with the addition of Banco de España
The external governance of the Eurosystem projects is instead very highly structured to take account of the interests of all the stakeholders involved at the various levels, e.g. the ECB, central banks of the ESCB/Eurosystem, central securities depositories (CSDs), commercial banks, the European Commission, regulatory and supervisory authorities, European trade associations. To understand the complexity of the external governance structure, see the figure below.
Forums for cooperation in the EU
Banca d'Italia assigns great importance to the extensive and timely exchange of information on developments in payment systems with the banking and financial communities.
Cooperation between the Bank and market players takes a number of forms (for example, public consultations) and occurs in various contexts (both formally and at more informal conferences/training workshops with participants from the various payment systems).
By their very nature, payment systems are constantly evolving from a technical, regulatory and best practice perspective. Banca d'Italia is accordingly active in a number of forums for international cooperation (committees, working groups and task forces) with the objective of ensuring the efficiency, security, harmonization, and integration of financial intermediaries in domestic and international payment systems.
Banca d'Italia representatives take part in the following committees set up and chaired by the ECB:
- Market Infrastructure and Payments Committee (MIPC): the ECB committee responsible for overseeing payment systems, promoting innovation and defining future strategies. It meets in extended composition, with all the central banks of the ESCB present, and in standard composition, comprising the euro-area central banks only;
- Market Infrastructures Board (MIB): the ECB body that is responsible for the development of all the settlement and collateral management infrastructures of the Eurosystem. It is in charge of operating TARGET2 and TARGET2-Securities and of future infrastructure projects. The MIB's composition changes depending on the infrastructure concerned.
Within the MIPC and MIB there are numerous subgroups and task forces devoted to specific issues.
Banca d'Italia is also very active on the market cooperation front and takes part in the international contact groups chaired by the ECB, while it presides in turn over the national contact groups.
- Advisory Group on Market Infrastructures for Securities and Collateral (AMI-SeCo): EU-wide contact group for issues relating to the settlement of securities and the use of collateral.
- Advisory Group on Market Infrastructures for Payments (AMI-Pay): EU-wide contact group that promotes dialogue on the development, innovation and integration of payments in Europe.
- National Stakeholders Groups (NSGs): the main channel of communication between institutions that operate the infrastructures and the national financial communities. Since October 2017, two separate NSGs have been operating at national level: one deals with issues relating to TARGET2-Securities and collateral in general and reports to the AMI-SeCO, while the other deals with issues linked to payments and reports to the AMI-Pay. Both groups are chaired by Banca d'Italia.