T2-T2S Consolidation: centralized liquidity management

The T2-T2S Consolidation platform is a project presented by the Eurosystem as part of Vision 2020, its strategy to develop market infrastructures, and involves the 'consolidation' of TARGET2 (T2) and TARGET2-Securities (T2S), in terms of both technical and functional aspects.

The 4CB (Deutsche Bundesbank, Banque de France, Banco de España and Banca d'Italia) were entrusted with developing the consolidated platform, a work they began in December 2017, following the ECB Governing Council's formal approval of the project. It is scheduled to go-live in March 2023. The completion of T2-T2S Consolidation will mean savings both for market players, who will be provided with new functions, and for the Eurosystem, since operating costs will decrease.

With T2-T2S Consolidation, the Eurosystem seeks to optimize the services currently provided by T2 and T2S, integrating the securities and cash settlement services, and offering new functions involving liquidity management and support tools for reporting. In this way, they will be able to meet the latest market needs. The new consolidated platform will allow participants to centrally manage and monitor liquidity across all TARGET Services (T2, T2S and TIPS) through a single main account that will be linked to accounts dedicated to different services. Any liquidity held in dedicated cash accounts will be taken into consideration for minimum reserve purposes without having to transfer the balances back to the main cash account. Just as with T2S and TIPS, the new platform will also be multi-currency.

From a technical point of view, the most important innovations will address the implementation of the ISO 20022 standard for communication in T2 and the use of the advanced technology currently employed for T2S, as well as share between then some of their components in order to achieve savings and to improve overall efficiency. The consolidation of their technical, application and infrastructural elements will improve the usability of the services provided and will give European banks a single entry point (Eurosystem Single Market Infrastructure Gateway - ESMIG) to all the services provided by the Eurosystem's infrastructures. Participants will be allowed to choose between different connectivity options and between two different network service providers chosen through a European tender for which Banca d'Italia acts as agent on behalf of the Eurosystem.

The new platform will provide technical and organizational solutions to make it more resilient, especially in terms of cyber security, in response to the escalation and evolution of cyber threats and in line with the Guidance on cyber resilience for financial market infrastructures published CPMI-IOSCO.


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