The role of central banks

Central banks, as promoters of financial stability, pay close attention to the smooth functioning of the securities financial market infrastructures. These infrastructures are key elements for the financial markets due to the systemic risk they entail, since a problem on it can affect the payment systems where the transactions are settled, the smooth execution of the monetary policy and the financial system as a whole. A large part of the economy’s financial operations are channelled through these infrastructures.

The central banks’ interest and responsibility in these systems stem from the duties entrusted to them in their fields of competence.

Central bank of issue

As a member of the Eurosystem, Banco de España acts as central bank of issue for the euro. Therefore, it should seek to ensure the stability of the currency, since it is essential that financial markets and their infrastructures remain safe and robust.

Providers of services

Securities clearing and settlement systems, operated by the central securities depositories (CSD), and the central counterparties (CCP), normally settle the cash from securities transactions in the payment systems managed by central banks, or in other words, in the cash accounts that participants maintain on their books (central bank money). Any incident or problem in securities clearing and settlement systems during settlement has a direct effect on payment systems.

Furthermore, the role of the Eurosystem, aiming at ensuring the smooth functioning of market infrastructures, contributes to this objective by providing services that give support and answer the needs of the financial markets. Banco de España participates in the development of services promoting integration and harmonization in the context of the European Commission initiative for the Capital Markets Union (CMU). In this sense, from the securities perspective, the Eurosystem operates a centralised platform for the securities settlement in central bank money in Europe (TARGET2-Securities) providing this service to the CSDs.

Securities settlement system users

Central banks use securities settlement systems (SSSs) to undertake credit operations. Most of these operations are guaranteed by securities registered in said systems. If these systems function incorrectly, this could present a significant risk to central banks and the correct transmission of the monetary policy. For this reason, the Eurosystem carries out periodic assessments as a user on SSSs and their links, against standards established by the Eurosystem itself. Compliance with these standards authorises them to be used by central banks when carrying out monetary policy and intraday credit transactions.

In order to avoid duplications with the requirements that the CSDs must meet, following the Regulation (UE) nº 909/2104 of the European Parliament and of the Council, of 23 July 2104, on improving securities settlement in the European Union and on central securities depositories, the Eurosystem decided to revise the SSSs and their links assessment framework. After this revision, Eurosystem requests the CSDs that operate the securities settlement systems and their links the compliance with the mentioned above regulation and with some Eurosystem criteria that were included in the former framework but are not covered in the Regulation. These criteria have been incorporated to the ECB Guideline on the implementation of the Eurosystem Monetary Policy execution framework, in the revision of 2018.


Due to the interest listed above, as the Securities Market Law disposes, Banco de España will ensure, together with the National Securities Market Commission (CNMV), by which the smooth functioning of securities clearing and settlement infrastructures preserves the financial system stability as a whole. It uses international standards and practices as a benchmark, such as Principles for Financial Market Infrastructures (PFMI), published in April 2012 by the Committee on Payment and Market Infrastructures and the International Organisation of Securities Commissions (CPMI-IOSCO); these were officially adopted by the Eurosystem in June 2013. In addition, the CPMI-IOSCO has published a series of guidelines about the methodology and application of the PFMI and about certain aspects of them.

The selection of material offered in the related information column serves to provide the public with an overview of the documents that are used in the daily activity of monitoring securities clearing and settlement systems, such as the methods and practices of the CPMI-IOSCO.

Banco de España, as a member of the Eurosystem, takes part in all the activities carried out by the latter in the securities industry and collaborates with other central banks and the securities regulators in this field. Specifically, it acts as a catalyst supporting initiatives and promoting changes that enable the integration and improve the safety and efficiency in the post-trading sector,

Recognised as a competent authority in EMIR and CSDR

EU regulations recognise central banks as relevant authorities as banks of issue of the currency in which securities transactions are settled. Specifically, Article 18 of EU Regulation no. 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (EMIR), includes the central banks of issue among the members of its supervisory colleges, and Article 12 of EU Regulation no. 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories (CSDR), recognises the participation of the central bank of issue in the authorisation and supervision of CSD. These two regulations also considered a central bank to be a relevant authority when it oversees the securities clearing and settlement systems and when it provides cash accounts for the settlement of securities transactions.