The Executive Board of the Riksbank, Swedens central bank, has decided not to allow the settlement of transactions denominated in Swedish Krona on Target2 Securities (T2S) at this time.
It is understood that the Swedish market is positive to T2S, a project launched by the Eurosystem to provide a common technical platform for securities settlement in Europe, in the slightly longer term but does not wish to make arrangements now to use T2S for transactions in local currency.
However, the Riksbank remains open to a review of this decision should there be an interest in using T2S for transactions in Swedish Krona.
The latest decision follows the advice of the Swedish Bankers Association (SBA) in December last year that the Riksbank and Euroclear Sweden should not sign the agreements with T2S at present. SBA is in principal in favor of Sweden being part of T2S over the long term.
Too many uncertain parameters were the reason the Association was unable to make a recommendation in favor of joining T2S.
SBA advised that the central bank and market participants should continue to follow T2S closely and to have an active and close dialogue with ECB and the T2S project with an aim to make it possible for Sweden to join T2S in the future. However, prior to deciding on potentially joining T2S, the market should assess which account structure that best supports the markets in the future.
T2S is scheduled to start in 2015. There have, however, been two delays to the platform, with industry sources expressing doubt about whether it will go ahead and whether the projected costs of the project around 1.4 billion to date would outweigh the benefits.
(JDC)