ANNUAL REPORT 2008 - Polymer Bank Notes of the World

and Settlement Advisory Monitoring ExpertGroup (CESAME) which addresses the removalof the first set of barriers. The ECB also continuedto take part in the Legal Certainty Group, whichin August 2008 presented 15 recommendationson the removal of legal barriers related topost-trading.Since harmonisation of the European legalframework forms the basis for SEPA, theEurosystem has taken an active interest inCommunity legislation in this area. ThePayment Services Directive 13 was formallyadopted in November 2007. According to theEuropean Commission, the Member States arewell on track with their work on transposing theDirective into national law before the deadlineof 1 November 2009. The ECB participates inthe Commission’s transposition working group.The review of Regulation (EC) No 2560/2001on cross-border payments in euro 14 also hasmajor consequences for SEPA and especially forSEPA direct debits. It is widely recognised thatthis Regulation was the trigger for the bankingindustry’s decision to start developing SEPAin 2002. The Commission’s proposal 15 aims atadapting the Regulation to the current paymentslandscape, for example by extending it to directdebit transactions. This will mean that the pricesfor cross-border SEPA direct debit transactionscannot be higher than those for correspondingnational direct debit transactions. The ECB hasbeen involved in the Commission’s work on thedraft regulation and has published an opinion inthis context. 16The ECB has also been involved in theCommission’s preparations for a review of theE-Money Directive, which establishes the legalframework for e-money institutions’ activities. 17The Commission states that the provision anduse of e-money is not growing as expected andtherefore suggests amending the Directive.From the ECB’s point of view, the review iswelcome; however, some parts of theCommission’s proposal cause concern,particularly with regard to the prudentialframework and institutional status of e-moneyinstitutions. 18PROVIDING CENTRAL BANKING SERVICES WHICHFOSTER FINANCIAL INTEGRATIONTARGET2, the second generation of theEurosystem’s large-value payment system,successfully went live on 19 November 2007,and fully replaced the first-generation TARGETsystem on 19 May 2008. The new system isdesigned to give euro money and financialmarkets an effective and secure executionmechanism for the real-time settlementin central bank money of euro payments.TARGET2 represents a decisive contributionby the Eurosystem to European financialintegration. It is the first market infrastructure tobe completely integrated and harmonised at theEuropean level, and has remedied the previousfragmentation in the management of centralbank liquidity and the execution of large-valuepayments. The new system’s features haveboth enabled and driven organisational changesamong credit institutions that operate in severalEuropean countries, by allowing these entitiesto rationalise their back office functions and toconsolidate their management of euro liquidity(see Section 2.1 of Chapter 2).Furthermore, the Eurosystem and marketparticipants have continued their work onthe TARGET2-Securities (T2S) project. T2Swill be a multi-currency platform used byEuropean central securities depositories for thesettlement of securities transactions in centralbank money. The Governing Council decidedon 17 July 2008 to build T2S and to assign itsdevelopment and operation to the DeutscheBundesbank, the Banco de España, the Banque13 Directive 2007/64/EC of the European Parliament and of theCouncil of 13 November 2007 on payment services in the internalmarket amending Directives 97/7/EC, 2002/65/EC, 2005/60/ECand 2006/48/EC and repealing Directive 97/5/EC.14 Regulation (EC) No 2560/2001 of the European Parliament andof the Council of 19 December 2001 on cross-border paymentsin euro.15 See http://ec.europa.eu/internal_market/payments/crossborder/index_en.htm16 Opinion on a new regulation on cross-border payments in theCommunity (CON/2009/1).17 See http://ec.europa.eu/internal_market/payments/emoney/index_en.htm18 Opinion on a directive on the taking up, pursuit andprudential supervision of the business of electronic moneyinstitutions (CON/2008/84).ECBAnnual Report2008161