ECB faces uphill battle for pan-European securities settlement system

ECB faces uphill battle for pan-European securities settlement system

The European Central Bank's (ECB) plans to implement an integrated securities settlement system in the euro zone is set to face further delays as EU finance ministers call on it to build a business case for the initiative.

The ECB believes an integrated securities settlement infrastructure in the euro zone could cut settlement costs by up to 90%. The system would connect all clearing networks in the euro zone into a single platform, extending the payments system used for central bank operations to cover securities settlements.

But according to a Financial Times report a panel reporting to EU finance ministers is expected to say that the ECB needs to undertake another feasibility study and provide a business case for the integrated settlement infrastructure, dubbed Target2-Securities.

Earlier this month the European Central Securities Depositories Association (ECSDA) - a trade association of 42 settlement bodies - called for the ECB to postpone the plans and conduct further study and consultation.

Meanwhile finance ministers in a number of EU member states - the UK, the Netherlands, Belgium and Sweden - have reportedly raised fears about the scheme, including concerns that the settlement system could become a public monopoly.

According to the FT, the ECB expects a decision on Target2-Securities by its governing council in March, rather than late February as originally envisaged, to take into account of the concerns of finance ministers.

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