- Four key institutions write to the European Central Bank asking for a delay until 2022.
- They cite the coronavirus crisis and other reasons for asking for the delay.
- “Many national authorities have requested banks to focus on maintaining their core activities,” they wrote.
A group of major banking associations in the EU has asked the bloc’s central bank to put a one-year hold on the plans to consolidate the TARGET2 and TARGET2 Securities schemes.
Four institutions signed a letter to the European Central Bank (ECB) in which they outlined their concerns about proceeding with the move.
The move was supposed to be in place by November 2021 and was intended to tackle the issue of surging demand for liquidity when it comes to settlement and payment.
However, the four banking bodies cited the coronavirus pandemic and the recent decision of SWIFT to delay its ISO 20022 migration as reasons for the move to happen.
They said that banks were struggling to find the resources to move ahead with the project due to the coronavirus crisis.
Many banks are instead transferring all of their energies to their main functions as the crisis continues, they claim, and are finding that focusing on this cross-border payments project could distract from that.
The four institutions that signed the letter are the European Banking Federation, the European Savings Banks Group, the European Association of Co-operative Banks and the European Association of Public Banks.
In it, they suggest that a new deadline could be November 2022.
“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,” they wrote.
“Many national authorities have requested banks to focus on maintaining their core activities (e.g. financing the economy, maintaining the stability and the smooth functioning of their payment systems and payment services).”
“Banks have succeeded in ensuring the continuity of all infrastructures, the smooth functioning of payment systems and maintaining their full scale services to customers in these circumstances but to do so they have had to reallocate their resources (both physical and financial), dramatically reducing change activities where possible,” they explained.
The technical side of the project has also been changed by the pandemic, they said.
“Furthermore the lockdown situation, also globally, impacts the availability of resources for IT projects and our members observe that the remote working has already had a negative impact on software development projects,” they said.
The banking groups also cited the decision from SWIFT to postpone some of its planned updates to cross-border payments infrastructure.
“The fact that the SWIFT network will not be supportive in time to forward TARGET2 payments in ISO 20022 format to the beneficiary banks will require banks to implement market practice guidelines to ensure that there is no data truncation for cross-border ‘leg-out’ payments,” the banking groups said.
Keep up to date with all of the latest ups and downs in the online money transfer space by heading over to our news pages and reading some more articles.
