The European Central Bank (ECB) has published an article by a member of its executive board, Yves Mersch. The article considers the ECB’s work on building a market infrastructure of tomorrow.

Points of interest include:

• following the launch of TARGET2-Securities, challenges are constantly emerging that require the Eurosystem to adjust and enhance the financial market infrastructure. By way of example, as digitalisation changes the way the financial industry operates, the infrastructure that supports it must adapt to the ever-changing environment. The Eurosystem is keen to embrace the opportunities that these changes bring to provide new and enhanced services and functionalities;
• one innovation currently being investigated by the Eurosystem is distributed ledger technology (DLT). DLT offers the possibility to share records across defined networks, which could potentially revolutionise the way asset ownership is recorded or how products are ordered and delivered. It is, however, still very new technology requiring further testing, which prevents large-scale use within the Eurosystem’s market infrastructure. However, the Eurosystem is currently assessing and reflecting what its potential impact on the financial market infrastructure could be and what possibilities it could present in terms of new services; and
• the Eurosystem is also currently looking into ways in which the three cornerstones of the financial market infrastructure (money, collateral and securities) could be brought closer together to improve efficiency. For example, a market consultation has been held to ask the market for its views on ways in which TARGET2, the Eurosystem’s real-time gross settlement system, and T2S can be streamlined to increase overall effectiveness, potentially by creating a single interface for both systems.

View Eurosystem work on further enhancing the financial market infrastructure, 7 September 2016