Community Readiness Monitoring
In July 2020, the Governing Council of the ECB decided to extend the timeline of the TARGET2/T2S consolidation project by 12 months. It is thus scheduled to go live in November 2022. The Eurosystem is currently working on adapting the detailed project plan, including the key milestones relevant to community readiness monitoring. Please note that the documents listed here still refer to the previous project schedule with go-live date November 2021. The new schedule of milestones as a basis for community readiness monitoring will probably be available in autumn 2020.
Community readiness monitoring – why?
In November 2022, the current TARGET2 high-value payment system will be deactivated. The new T2 service – consisting of central liquidity management (CLM) and RTGS – will commence operations at the same time. All T2 user communities across Europe need to be able to migrate to the new service by a certain deadline.
In order to ensure successful migration, the Eurosystem has set out a harmonised and structured process for community readiness monitoring. As part of this process, central banks support their user communities and monitor their levels of readiness. User community readiness levels are collated and evaluated at the European level.
The Eurosystem’s approach to community readiness monitoring
Community readiness monitoring is based on the “Overall key milestones to ensure a successful big-bang migration in November 2021”, which were devised by the Eurosystem in close consultation with the market. At present, these consist of 22 milestones which are used to monitor the readiness levels of all institutions participating in T2. The milestones define by when key activities regarding the preparations required needed for a successful migration should have been started and completed.
Readiness levels are surveyed approximately once per quarter. For this, the central banks survey all of their participants regarding the completion status of upcoming milestones. In addition, participants are asked to provide an estimate of their current project progress, and thereby their prospective readiness for migration, using a traffic light system. Their responses give central banks valuable insight into their user community’s readiness and enable them to provide institutions with timely, dedicated support should any difficulties arise.
These responses also feed into community readiness monitoring at the European level. Every central bank participating in TARGET2 is required to take part in this monitoring process and to report on both the progress of its own internal connectivity projects as well as those of its participants.
At the European level, the results of each community readiness reporting cycle are summarised in a community readiness report and an accompanying dashboard. This provides participants with an overview of the preparatory work throughout all markets participating in TARGET2.
Community readiness monitoring for the German user community
In the German market, around 1,200 institutions are currently making preparations to participate in TARGET2/T2S consolidation – and are therefore subject to community readiness monitoring by the Bundesbank. Around 70 percent of participants have chosen the “co-management” option, primarily in cooperation with their central institutions in the savings bank and cooperative bank sectors. The remaining 30 percent have opted for direct participation, possibly involving a technical service provider.
For the German market, 13 out of a total 1,200 institutions are subject to particularly close monitoring on account of their size and critical importance for the German financial centre (“closely monitored participants”, or CMPs). The Bundesbank forwards their responses to the ECB individually. All other participants are “regularly monitored participants” (RMPs). These responses are summarised and forwarded to the ECB in consolidated form.
To record all institutions that participate in T2 via the Bundesbank and thus to ensure that all these institutions are included in the community readiness monitoring process, the Bundesbank wrote to all institutions concerned at the beginning of 2019. Institutions planning to participate in T2 are obliged to give the Bundesbank the names of their contact persons for their TARGET2/T2S consolidation adaptation projects.