Oversight of large-value payment systems is based on the internationally accepted Core Principles for Systemically Important Payment Systems (SIPS), defined by the Committee on Payment and Settlement Systems (CPSS) and adopted by the Governing Council in 2001.
Systemically important payment systems should comply with the ten Core Principles. These principles are universal guidelines to encourage the design and operation of safer and more efficient infrastructures worldwide.
With respect to Core Principle VII, the Eurosystem elaborated in 2006 on the business continuity oversight expectations for systemically important payment systems (SIPS) and included guidance for implementation.
The ECB manages and coordinates TARGET2 and EURO1 oversight activities within the Eurosystem.
The overall provision and performance of services for the key payment infrastructures settling euro-denominated transactions (TARGET2, EURO1 and the Continuous Linked Settlement system) is stable and resilient. This was shown by the oversight activities and assessments carried out in recent years, a period characterised by various financial market tensions.
Large-value payment systems form the backbone of the euro area market infrastructure and contribute to the stability and efficiency of the financial sector and the economy as a whole.
The Eurosystem developed an oversight policy framework with respect to all large-value payment systems which settle euro-denominated transactions, both to its own systems and to those that are privately operated.
The TARGET2 system is run by the Eurosystem. The Eurosystem has decided to perform oversight of TARGET2 for reasons of consistency with other payment systems, and in order to comply with Responsibility B of the Core Principles for systemically important payment systems.
EURO1 is a system that is not linked to a specific country. The owner and manager of the system, EBA CLEARING, is incorporated in France and maintains an office in Belgium. EURO1 is established under German law and works on a multilateral net basis. Participating banks can be located anywhere in the OECD but need a branch or subsidiary in the EU through which to access EURO1.
The Continuous Linked Settlement (CLS) system was launched in September 2002 with a view to providing a multi-currency service for the synchronous (payment-versus-payment) settlement of payment instructions relating to foreign exchange (FX) transactions.
The system is operated by CLS Bank International. CLS currently settles 17 of the world’s most-traded currencies, including USD, EUR, JPY, GBP and CHF.
Due to its incorporation in the US, CLS Bank International is supervised by the Federal Reserve. The Federal Reserve is also the central bank with primary responsibility for the cooperative oversight arrangement of CLS. The arrangement consists of the G10 central banks and the central banks whose currencies are settled in CLS and is subject to a "Protocol".
The relevant Eurosystem overseers closely monitor the development and performance of CLS within this cooperative oversight framework. Within the Eurosystem, the ECB has primary responsibility for the settlement of the euro by CLS in close cooperation with all the national central banks (NCBs).