The Central Bank has an important role in the oversight of payments systems and in the development of payments systems policy, both in the domestic and European context.
Oversight of payment systems is aimed principally at ensuring that payment and securities settlement systems are safe, effective and efficient and that access to such systems is not restricted. This is a core requirement for maintaining financial stability and for meeting the business needs of the economy. This oversight activity is focussed on the domestic retail electronic and paper-based clearing systems while we also share in the oversight responsibility for European and international payments systems. This activity is described in detail in the separately published Oversight Report (2010).
The Single European Payments Area (SEPA) will create a single harmonised, open, European “domestic” payments market. We will play a strong role in the development of a National Payments Strategy in order to promote the take-up of alternatives to paper-based instruments and cash, in line with best international practice.
TARGET2 (Trans-European Automated Real-time Gross Settlement Express Transfer System), which was introduced in 2008, is the single pan-European system used by each of the national payment systems to ensure a uniform wholesale payment infrastructure, thus promoting efficiency and integration in European financial markets.
The next major initiative is TARGET2 Securities (T2S) which will harmonise the settlement of securities trades. T2S will act as a catalyst to integrate European post-trading financial services, and will foster competition by providing harmonised access to settlement services within the European financial market.
In order to address the significant increase in the range and complexity of collateral arising from the financial crisis, we will participate in a Euro area wide assessment aimed at harmonising Collateral Procedures
Our core functions in relation to currency are to manufacture, issue, store and process bank notes and coins, thereby contributing to the availability, integrity, security and quality of the euro.
We are responsible for the provision of banknotes and coins to very strict quality standards established for the Eurosystem. Currency production and issue operations are ISO quality accredited. The aim is to ensure that there is an adequate supply of high quality banknotes and coin and to adhere to ESCB security procedures.
During 2010, the Eurosystem Banknote Recycling Framework was implemented which requires professional cash handlers to authenticate banknotes before they are re-issued into circulation. We are monitoring the improvement in the quality of banknotes as a result of this initiative. An overall assessment of the effectiveness of the cash cycle and our role in it will also be undertaken.
Demand for coin has always been volatile and we will monitor trends in this regard to ensure our coin production and issue strategy is efficient and meets the needs of the public, the retail sector and the banks.