Sara Testi
- 21 March 2024
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 2, 2024Details
- Abstract
- The global role of a currency can be measured in several ways, including by looking at its use in payments. After March 2023 the share of the euro in total Swift payment messages (i.e. payment instructions sent via the Swift network) appeared to drop. This coincided with a major infrastructure change in Europe – namely, the launch of the Eurosystem’s next-generation large-value payment system for the euro, T2, which replaced TARGET2 – and a move to a new Swift message standard. The associated technical changes have altered the ways in which banks make euro payments and manage euro liquidity, resulting in a break in the data on euro‑denominated Swift payment messages. In fact, the total value of euro payments settled in T2 has actually remained largely stable relative to figures for its predecessor, TARGET2, and so has the global reach of the payment system. This analysis shows the importance of accounting for technical factors when interpreting indicators based on payment traffic.
- JEL Code
- E42 : Macroeconomics and Monetary Economics→Money and Interest Rates→Monetary Systems, Standards, Regimes, Government and the Monetary System, Payment Systems
F40 : International Economics→Macroeconomic Aspects of International Trade and Finance→General
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
- 4 August 2022
- OCCASIONAL PAPER SERIES - No. 300Details
- Abstract
- As the operator of a systemically important payment system (SIPS), the Eurosystem has the responsibility of regularly assessing the resilience of the Trans-European Automated Real-time Gross Settlement Express Transfer System (TARGET2) to various types of risks, as set out in the Principles for Financial Market Infrastructures (PFMIs) drawn up by the Committee on Payments and Market Infrastructures (CPMI) and International Organization of Securities Commissions (IOSCO). To identify, measure, monitor and mitigate these risks over time, the TARGET2 operator has developed specific approaches that include both qualitative and quantitative elements.
- JEL Code
- G20 : Financial Economics→Financial Institutions and Services→General
E42 : Macroeconomics and Monetary Economics→Money and Interest Rates→Monetary Systems, Standards, Regimes, Government and the Monetary System, Payment Systems
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
C10 : Mathematical and Quantitative Methods→Econometric and Statistical Methods and Methodology: General→General
C63 : Mathematical and Quantitative Methods→Mathematical Methods, Programming Models, Mathematical and Simulation Modeling→Computational Techniques, Simulation Modeling
- 3 May 2021
- ECONOMIC BULLETIN - ARTICLEEconomic Bulletin Issue 3, 2021Details
- Abstract
- This article examines liquidity usage in TARGET2 – the real-time gross-settlement (RTGS) system owned and operated by the Eurosystem – and related developments over time. More specifically, it analyses the velocity at which liquidity circulates in the system and the interplay between the liquidity sources that participants use to fund their payment obligations. Growth in levels of central bank reserves has affected TARGET2 participants’ behaviour, giving lower incentives to recycle incoming liquidity, which is reflected in decreased liquidity velocity and an increased use of the central bank reserves on the account balance to fund outgoing payments. Interest rates are also found to affect the behaviour of TARGET2 participants. Moreover, it is shown that liquidity usage varies significantly across participants and countries. A bank-level panel analysis quantifies the impact of specific TARGET2 participant features and monetary policy decisions on liquidity usage in TARGET2.
- JEL Code
- G10 : Financial Economics→General Financial Markets→General
G20 : Financial Economics→Financial Institutions and Services→General
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
- 21 February 2017
- OCCASIONAL PAPER SERIES - No. 183Details
- Abstract
- The paper reports the outcome of the stress-testing of liquidity risk in the TARGET2 payment system, with the study having been conducted by an ad-hoc group composed of operators and overseers of TARGET2. The study aims to assess the resilience of the system, defined as the network of its participants, and the appropriateness of liquidity levels under tightened liquidity conditions. The scenarios analysed are based on extreme shocks to the value of collateral of different levels and types that lead to a decrease in the intraday credit lines available in TARGET2 and, as a result, the payment capacity of TARGET2 participants. The tool used to perform these stress tests is the TARGET2 simulator, which provides access to real transaction level data and allows simulations to be run by changing parameters, in this case the credit lines. The period under analysis is one maintenance period for the years 2008 to 2013. In general, the stress-testing indicates that the system is resilient under the stress scenarios; liquidity levels seem to be appropriate and supported by the efficient liquidity management features of TARGET2. Even in the worst simulated event of a 70% drop in all collateral value, 80-90% of TARGET2 turnover would have been settled. The scenario results take also into account that the period under analysis was characterised by unconventional monetary policy measures.
- JEL Code
- C63 : Mathematical and Quantitative Methods→Mathematical Methods, Programming Models, Mathematical and Simulation Modeling→Computational Techniques, Simulation Modeling
E42 : Macroeconomics and Monetary Economics→Money and Interest Rates→Monetary Systems, Standards, Regimes, Government and the Monetary System, Payment Systems
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
G01 : Financial Economics→General→Financial Crises