The Bundesbank board member is responsible, among other things, for payment transactions. There were recently problems with the start of the new clearing system in the euro zone (“Target2”). It was postponed to the end of March 2023.
Frankfurt The Bundesbank attributes the postponement of the new settlement system for payments between commercial banks to a lack of staff. “The working days of our people who take care of the project were obviously not enough,” said Bundesbank board member Burkhard Balz of the Handelsblatt with a view to deficiencies in the test systems provided.
The absence of employees in the corona pandemic played a major role – “not only for us, but also for the Italian central bank”. In addition, several employees have switched to the private sector.
“The competition for good IT staff is tough. Since the target migration is a very special large-scale project, it is not easy to get staff elsewhere who can step in when there are bottlenecks,” said Balz, who is responsible for payment transactions on the Bundesbank board.
The European Central Bank (ECB) had postponed the start of the modernized settlement system for payments and securities transactions, known in technical jargon as “Target2”, from the end of November 2022 to March 20, 2023. This shift became known at the end of October. It was already the second postponement. In July 2020, the ECB had already postponed the date by a year.
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Previously, German commercial banks had written to Balz complaining about unresolved errors in the test system and a lack of test options. The central banks from Germany, France, Italy and Spain provide the software and test environment.
Target project: Not all banks were ready to go in the fall
The Target project aims to standardize the previously separate processing of payment transactions and securities and thereby make them more efficient. Should there be difficulties when launching the new platform, the worst could be problems with payment transactions, including disruptions to transfers and cash withdrawals.
At the end of October, the ECB named software defects as one of the reasons for the postponement of the start date. She pointed out that not all banks could have completed the tests and been ready by the planned start date. The central bank also cited the geopolitical environment and strong fluctuations on the financial markets.
According to Balz, there were several reasons for the postponement. The test environment was “not initially designed and stable as we had imagined”. “Although the test conditions improved significantly over the course of the summer of 2022, it was not possible to test quickly enough and then eliminate all software defects.”
For the planned start on March 20, Balz said that they were on the right track. “On the part of the Bundesbank, we speak weekly with the banks in the German market about the status of the preparations. This enables us to identify and eliminate any problems that arise in good time.” The aim is for all European banks to have completed the necessary tests by the end of January 2023.
However, just before Christmas, the Bundesbank admitted that there were still deficiencies in the software. The central banks involved would work “at full speed to fix any errors that still exist and to further stabilize the software”. She called on the banks to carry out further system tests. On February 10, experts from the ECB want to confirm the planned migration date in March.
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