Four European banking associations have called on the ECB to institute a one-year delay to the consolidation of the Target2 real-time gross settlement mechanism with the T2S securities settlement platform.
Initially posited in 2015, the ECB's Vison20/20 project for the harmonisation and integration of European cash and securities settlement services represents a major upheaval for European banks.
However, the pressures caused by the ongoing pandemic and Swift's recent move to delay the timetable for the introduction of the new ISO 20022 messaging standard respresent major roadblocks to the consolidation effort.
The call for a slowdown to the work comes in a letter to the ECB co-signed by The European Banking Federation, European Savings Bank Group, European Association of Co-operative Banks and European Association of Public Banks.
"In light of recent developments, we urge the ECB to consider a delay of one year in the consolidation project and to bring the deadline to November 2022," the trade bodies write, pointing to the severe constraints on bank resources from Covid-19.
Furthermore, Swift's postponement of the switchover to ISO 20022 will require all affected parties to reconsider their cross border payments strategy and re-engineer their internal projects, concept and documentation to deal with the mismatch of message types being introduced.
"Given the advanced T2-T2S consolidation project status, the decision has to be made as soon as possible in order to allow the market to take time to conduct a proper analysis of the different options available rather than rush into individualised solutions leading to possible unexpected effects on clients and the wider community," the letter states.
"Since the implementation is to be by means of a 'big bang', failure is not an option which means that the project is dependent on the weakest link in the chain being ready notwithstanding any unexpected and unforeseen events for which adequate contingency is considered to be essential," the paper concludes.