Yves Mersch: Making Europe’s financial market infrastructure a bulwark of financial stability Speaking points by Mr Yves Mersch, Member of the Executive Board of the European Central Bank, for the Bank of France/Sciences Po research seminar “Financial stability in a digital world”, Paris, 7 June 2016. *  *  *  Introduction •  Europe’s financial market infrastructure has proved to be resilient through bouts of financial market volatility;  •  it has supported the liquidity and stability of financial markets in times of stress;  •  the European Central Bank and the Eurosystem, in conjunction with European legislators and market participants, have made Europe’s financial market infrastructure into the bulwark of financial stability it is today;  •  in the first part of my presentation, I will investigate the potential impact of the digitalisation of financial services on Europe’s market infrastructure;  •  in the second part, I will outline how the Eurosystem plans to deal with the technological and strategic challenges which affect our market infrastructure.
Part 2: The Eurosystem’s vision for 2020 •  To deal with the technological and strategic challenges to its market infrastructure, the Eurosystem has developed three key action points it will work on in the run up to 2020;  •  The first is to explore synergies between TARGET2 and T2S, potentially even merging them into a single platform in the future, with the goal of achieving a consolidated market infrastructure for large-value payments and securities settlement;  •  The enhancements envisaged for Europe’s financial market infrastructure will benefit users by providing access to all available services via a single gateway;  •  Moreover, these enhancements will provide an opportunity to further increase the resilience of the system, which is also beneficial from a financial stability perspective;  •  The second action point is to consider new service opportunities that the closer integration of TARGET2 and T2S would bring;  •  in particular, the Eurosystem is considering enhancing the TARGET2 services with instant payments, at least in the settlement layer;  •  Third, there are plans to review the harmonisation of Eurosystem arrangements and procedures for collateralisation;  •  The three action points are currently in the design phase, and it is expected that decisions on the actual implementation of the projects will be taken over the summer;  •  For all three action points, the Eurosystem will continue to work closely with the market in order to benefit from its knowledge and experience as well as to ensure that Europe’s future financial market infrastructure fully meets the needs of its users.