The payment and settlement systems in Bulgaria continue their development, which aims to both introduce modern technological solutions and guarantee the security of the payment process, as well as preparation for the introduction of the euro in Bulgaria, reads an article by Bulgarian National Bank (BNB) Under Governor in charge of the Banking Department Nina Stoyanova, published in the latest Quarterly Bulletin of the Association of Banks in Bulgaria.
BNB, the banks and payment systems participants in the Bulgarian national component system (TARGET2-BNB) of the system for large value payments in euro TARGET2, are actively working to join the new consolidated TARGET Services platform. It will combine on a technical and functional level the TARGET2 payment system, the securities settlement platform TARGET2-Securities (T2S) and the service for instant transfers in euro TIPS, and as of November 2023 also a single Eurosystem Collateral Management System (ECMS). The launch of the consolidated platform in live environment is scheduled for March 20, 2023. The implementation of the new platform is determined by technological innovations in the field of payments, regulatory requirements and the changing needs of the participants.
At the beginning of this year, the project for migration of customer credit transfers in Bulgarian leva (BGN) to the standards of the Single Euro Payments Area (SEPA) was implemented. In this way, the processing of these payments went from being settled at a specific time three times a day to being settled throughout the day, within an hour.
Another important project, which started last year and is already in live phase, is for the execution of instant payments in BGN, where transactions are carried out within 10 seconds, 365 days a year, 24 hours a day. Nearly 2/3 of the customer accounts in Bulgaria are now reachable for instant payments. The deadline for migration to the new platform for instant payments in BGN is April 2023. The successful implementation of these projects and the broad participation of the banking community in them are prerequisites for a smooth future migration of all customer payments to payments in euro, in accordance with the standards applicable in the euro area.
In order to prepare and organize the migration of payments in the public sector in the country to the SEPA standards, an interdepartmental working group was created, which holds regular meetings. The project covers a wide range of tasks related to defining the structure of budget payments in ISO 20022 format, settlement of budget transfers in the new platform of BISERA6 for payments in BGN, based on the SEPA credit transfer scheme (SCT) of the European Payments Council, optimization of processes of centralization of budget funds, changes in the SEBRA system and the information exchange in it, and others.
With regard to the securities settlement systems in this country, changes are being prepared in accordance with the measures and activities foreseen in the National Euro Changeover Plan of the Republic of Bulgaria, and more specifically, joining of the Depository for Government Securities in the BNB (BNBGSSS) and the Central Depository AD (CD AD) to TARGET2-Securities. In September 2022, an explanatory seminar was held with the banks participating in the BNBGSSS with regard to the activities in the T2S accession project.
TARGET2-Securities offers pan-European settlement - of cash and securities, in central bank money. In this way Bulgarian securities will have a better accessibility for investors from the European Union (EU). The T2S platform provides harmonized and standardized settlement services, based on the Delivery vs Payment (DvP) principle, on a real-time gross basis. Currently, 20 European Central Securities Depositories (CSDs) use T2S. In line with the ECB schedule, it is planned that BNBGSSS will join T2S during the next migration window in September 2023, together with Central Depository AD and three other CSDs from the EU. After November 2023 only securities settled in T2S will be able to be used as collateral in the Eurosystem's main refinancing operations if they meet the relevant criteria. Link between T2S and ECMS is foreseen, and the funds for these operations will be settled on the accounts in the new TARGET Services platform.
In accordance with the requirements of the ECB for joining T2S, BNBGSSS and CD AD completed the preparation of the self-assessments of their systems and business processes. In the current fourth quarter of 2022 the signing of Framework Agreements for participation in T2S (T2S Framework Agreement) is also planned. In accordance with the Eurosystem's schedule for testing and inclusion of new CSDs in T2S, tests with depositories should begin in December 2022, and tests with the participation of banks – in the second quarter of 2023.
The changes in Bulgaria fully correspond to the trends in Europe towards the development of a harmonized and integrated financial and payment infrastructure based on common standards and instruments. The intensely ongoing processes, coordinated with all market participants, are a prerequisite for implementing the necessary changes in the payment systems and moving to the settlement of all payments in euro upon Bulgaria's accession to the euro area, the article concludes.