This benefits not only the participants but the CCP and the system as a whole; with a larger and more diversified pool of participants, the impact on the CCP due to a default of any single particular participant would be reduced. Self-clearing can also widen CCP access on cost-effective terms and allow proprietary derivatives trading firms, such as buy-side players, to join CCPs as members and thereby reduce their counterparty and fellow customer risks. CCPs will have the flexibility to design suitable self-clearing models, taking into account the risks and needs of self-clearing members. We have seen recent innovations by Eurex and CME to allow certain market participants which are not allowed to take part in the CCP risk mutualisation as a result of their mandates, to selfclear on the CCP. Remote clearing will allow offshore participants, which do not currently have a presence in Singapore, to join our CCPs, thus bringing about new, additional liquidity to local markets. The increased breadth and depth of the markets in turn benefits onshore members which will continue to be key players in our domestic markets. At the same time, such memberships allow offshore firms to gain familiarity with the local market and to deepen their participation. There are some understandable concerns if remote or self-clearing can undermine financial stability in domestic markets. In Singapore, our regulatory standards and expectations will not change. We will only allow CCPs to admit self-clearing or remote clearing members if they have put in place adequate admission, ongoing monitoring and risk management frameworks.
In the area of large value payment infrastructures, the degree of integration has increased very quickly. We should bear in mind that EURO 1 and TARGET have been clearly set up to face the challenge of the EMU. It was of great importance for large value payments, in particular those linked to the money market, to rely on systems handling efficiently and safely cross border transactions. Moreover, TARGET was a prerequisite for the effective conduct of the single monetary policy, because it ensures the settlement of monetary policy operations. The timeframe was particularly tight to build up the TARGET system. Therefore, the design of TARGET 1 was based on the principle of minimum harmonisation and on a decentralised architecture, with an interlinking of the national RTGS (Real-Time Gross Settlement Systems). TARGET 2, which is due to go live in 2007, will further improve the degree of integration of wholesale payment infrastructures. It will provide fully harmonised settlement services across Europe in real-time in central bank money, supported by a single price structure for domestic and cross-border payments and a single processing platform. This single platform will be used by all central banks of the ESCB to provide services to their banking community. TARGET 2 will enhance cost-efficiency and meet stateof-the-art business continuity procedures.