The Central Bank of Iceland launches a feasibility assessment on implementing Eurosystem’s TARGET Services for payments
The Central Bank of Iceland (CBI) has begun analysing and assessing the possibility of implementing the Eurosystem’s TARGET Services, specifically the TARGET Instant Payment Settlement (TIPS) and T2 interbank payment services. TIPS is an instant payment system, while T2 is a system for real-time gross settlement (RTGS) and central liquidity management (CLM). The Central Bank will focus first on TIPS and then follow with T2.
The Central Bank of Iceland’s objective with this analytical work is based on its legally mandated roles, one of which is to promote a safe and effective financial system, including domestic and cross-border payment intermediation. The Bank owns and operates an interbank payment system that is the prerequisite for executing both RTGS and instant payments in central bank money, as well as securities settlement and payment card settlement. The interbank system is therefore the foundation for effective payment intermediation in the Icelandic króna. It consists of two components: the real-time gross settlement component, or RTGS, and the instant payment component, EXP.
The Central Bank’s decision to begin analysing and assessing the TARGET Services is based on the objective of promoting resilience, security, and increased efficiency of domestic payment infrastructure in the long run.
Adopting the TARGET Services would ensure that the infrastructure for settlement of Icelandic instant payments is consistent with development in Europe. Adherence to joint standards can contribute to a larger selection of system solutions for instant payments in Iceland, would benefit consumers and bolster resilience. Implementing the TARGET Services would not affect the Central Bank’s role vis-à-vis participants in the current payment system.
A final decision on the adoption of the TARGET Services will be taken after a thorough analysis, with focus on the Central Bank’s technological, operational, statutory, and security requirements. Costs, contingency measures, and the ability to support country specific needs that the Icelandic financial system may have will be important factors in the decision-making process.
CBI will engage with participants in Icelandic payment intermediation while the analysis is ongoing and will invite stakeholders to participate in working groups to examine specific issues that may arise.
Press release no. 13/2024
9 September 2024