Eurosystem direct access policy for non-bank PSPs

The Eurosystem is the monetary authority of the Eurozone composed of the European Central Bank and Eurozone’s national central banks. It oversees Euro payment systems, including the TARGET services it operates.

In July 2024, the Eurosystem rather quietly published its “Policy on access by non-bank payment service providers to central bank-operated payment systems and to central bank accounts”, following the adoption of Instant Payments Regulation (IPR) in March 2024.

Indeed, the IPR introduced the possibility for non-bank PSPs, namely payment institutions (PIs) and electronic money institutions (EMIs) to

• participate in Euro payment systems (as direct participants as opposed to indirect participants)

• safeguard customer funds in accounts held at a central bank

PIs and EMIs won’t be able to safeguard customer funds at central banks

Let’s start with the later element, as Eurosystem’s answer is quite simple: PIs and EMIs won’t be granted access to central bank accounts to safeguard customer funds.

While the Eurosystem acknowledges the benefits to PIs and EMIs of safeguarding customer funds at central banks, it details that enabling them to do so would blur the lines between PIs/EMIs and banks or create an equivalent of a central bank digital currency (CBDC) misleading investors and customers. The risk would be that consumers and businesses favour PIs/EMIs to hold deposits and “adversely affecting the intermediation role of banks and their lending activity to the economy”.

National central bank-operated payment systems, like Bank of Lithuania’s CENTROlink, which acted as a sponsor bank for SEPA indirect participants, effectively allowed PIs and EMIs to safeguard customer funds on their equivalent settlement accounts. In light of these new Eurosystem policies, CENTROlink issued new safeguarding requirements to its customers.