The European financial system faced a major disruption on Thursday as the European Central Bank (ECB) reported a significant outage in its TARGET2 Securities (T2S) platform.
This system processes nearly €1.8 trillion in daily transactions across the eurozone, making it a critical component of financial operations in the region.
System Failure Halts Transactions
As reported by HotNews.ro, the outage began around 09:30 AM and affected communication channels essential for processing cash and securities transactions. The ECB has not yet provided details on the exact cause of the failure.
The T2S platform, which is used by central banks and financial institutions in 24 eurozone countries, has experienced technical issues in the past, though previous disruptions were resolved more quickly.
Sources from the financial sector reported a total communication breakdown, leaving the status of transactions at the time of the outage unclear.
Emergency Measures Implemented
The Bank of Greece confirmed that interbank transfers were temporarily impossible due to the malfunction. In response, the ECB activated an emergency channel to facilitate "high-priority payments," ensuring that at least some critical transactions could proceed.
The disruption has also impacted central securities depositories (CSDs), which are essential for the functioning of financial markets.
Typically, market participants communicate with T2S through these CSDs or national central banks, and the loss of connectivity has complicated transaction processing.
Potential Market Impact
Michael Thoms, a market structure expert cited by Reuters, explained that the outage could have cascading effects on liquidity.
“In transaction chains, where each step depends on the completion of the previous one, an interruption can disrupt an entire series of transactions. The longer the delay, the greater the impact on financial system liquidity,” he noted.
Since most transactions settle within two business days, the full effects of Thursday’s outage may become apparent at the start of next week.
Financial institutions and regulators will be closely monitoring the situation to prevent further disruptions in the eurozone’s banking system.
