Money and payments
4.3 New developments in payment systems
The Bank of Finland provides payment system services for its clients and participates actively in the Eurosystem’s development projects in the field of payment and settlement systems.
TARGET2 is a payment system operated by the Eurosystem through which banks settle payments between each other via accounts they hold with their respective central banks. The Bank of Finland provides payment system services through its TARGET2 component, TARGET2-Suomen Pankki, in which a total of 25 financial institutions held an account at the end of 2018.
TARGET2-Suomen Pankki marked its 10th anniversary in February 2018. The average daily number of payments settled via the system was 1,660, with an average aggregate value of EUR 48 billion per day. The number and value of transactions were similar to the previous year's figures.
Finland's share of the payments settled via TARGET2 was 0.5% in terms of transaction numbers and 2.5% in terms of aggregate value. In addition to TARGET2 services, the Bank of Finland provides payment system services through TARGET2-Securities with regard to current accounts needed in securities settlement.
Reform projects in Finland and in the Eurosystem
The Bank of Finland administers the collateral securing loans granted to banks through its own collateral management systems. At the beginning of 2018, it launched a project to enhance its collateral management systems by means of increased automation in the processing of credit claims used as collateral. The project is expected to be completed in summer 2019.
In 2018 the Bank of Finland was involved in three Eurosystem-wide projects in the field of payment and settlement systems. The end of November saw the launch of the TARGET Instant Payment Settlement (TIPS) service, which enables the necessary interbank settlement underlying real-time instant payments between end customers. At the initial stage, the system only has a few participant banks, but new participants will connect to the service in the course of 2019.
The reform of TARGET2 progressed according to plan as part of the project to consolidate the TARGET2 and TARGET2-Securities systems. The project will unify the two systems both functionally and technically. Consequently, the reform will have a significant impact on all TARGET2 participants and central banks. All participants will migrate to the new system simultaneously in November 2021.
Also the Eurosystem Collateral Management System (ECMS) project, which aims to harmonise the management of collateral securing central banks’ lending to banks, progressed as planned, and the new system will be launched in 2022.