The external treasury service consists in payments and collections on behalf of central government departments in foreign currency or in euro with non-euro-area countries. It comprises:
- payments in foreign curerency and in euro to non-residents on behalf of central government departments
- receipts in foreign currency and in euro in favour of the State budget and the treasury accounts of central government departments
- management of documentary credits.
The service is remunerated by the Ministry of Economy and Finance in the form of a percentage commission on the amounts transferred.
Payments are made, after provision of funds through execution of an expenditure appropriation to an account with the Bank, through a network of foreign correspondent banks, basedon payment instructions transmitted by the payor entities. They are executed within five working days of the date on which the funds are made available. For foreign exchange transactions, the exchange rate is that specified by the European Central Bank on the day of execution.
In respect of requests for payment, both in euro and in foreign currency, the amount of funds that must be available on the foreign correspondents’ accounts is determined daily. For payments in euro, funds are made available via giro transfers on the TARGET2 account; for foreign currency payments, where necessary the currency is purchased on the foreign exchange market.
Payments in euro and in foreign currency to central government departments by non-euro-area residents are executed on accounts that the Bank of Italy has with foreign correspondent banks. The beneficiary departments are credited with the euro equivalent of the amounts received.
Government departments may also constitute documentary credits against the supply of goods and services. The documentary credits are opened by means of advance deposits on the account managed by the Bank.
The cash balance on US dollar accounts held against documentary credits is invested automatically in overnight interbank deposits at the US federal funds rate, less a spread as remuneration for the service.
The possibility of settling transactions not only through the correspondent bank network but also through the Bank of Italy applications centre is now under study.
