The European Central Bank is to press ahead with the launch of its contentious settlement harmonisation project Target2-Securities and has assigned the development and operation of the facility to the Deutsche Bundesbank, the Banco de España, the Banque de France and the Banca d'Italia.
The pan-European 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. The ECB believes an integrated securities settlement infrastructure in the euro zone could cut settlement costs by up to 90%.
The project is expected to cost more than EUR200 million to develop and is slated for completion in 2013.
But the plans have riled the European Central Securities Depositories Association (ECSDA), which has argued that T2S would supplant services currently provided by its members.
The ECB has attempted to win over Euro area depositories during a lengthy consultation process, and in May released further details about the project in a bid to garner support.
In confirming its plans to proceed, the ECB says that - subject to certain conditions - "almost all euro area CSDs, representing a very large share of settlement activity in the euro area" have expressed their support and intend to use the service once it is in operation.
These conditions are believed to include demands by Euroclear that its customers are free to choose between its own platform and T2S.
CSDs outside the euro area have been invited to express their opinion until the end of 2008, although the Danish depository has already confirmed that it will use the system for euro and krone settlement. The Swedish and Swiss CSDs have indicated that they intend to participate for euro settlement but that a formal decision on their national currency has not yet been taken.
In a statement, the ECB says the start of the project constitutes a major step forward in the delivery of a single integrated securities market for financial services.
"T2S will provide a single, borderless pool of pan-European securities, as well as a core, neutral, state-of-the-art settlement process," says the central bank. "Market users will be able to access these assets through CSDs in a way which can accommodate, rather than perpetuate, national and regional differences."