Norges Bank is entering into formal dialogue with the ECB on participation in the T2 settlement system
Norges Bank has evaluated two alternatives for the next generation settlement system. The Bank considers participation in the Eurosystem’s T2 settlement system together with the other Nordic countries to be the best way forward for an efficient and secure payment system in the long term. Norges Bank is now entering into formal dialogue with the European Central Bank (ECB) to address remaining clarifications before making a final decision.
"Our assessment is that collaboration with Nordic and other European central banks is the best choice for secure and stable operation of the settlement system in the long term," says Governor Ida Wolden Bache.
Norges Bank’s settlement system (NBO) is the core of the Norwegian payment system and functions reliably today. At the same time, owing to technological advances, lengthy settlement system implementation periods and the settlement platforms chosen by Norway’s neighbours, the design of the next generation settlement system needs to be evaluated. Predictability is important for providing appropriate framework conditions for further financial-sector development of payment and settlement services.
Norges Bank has assessed two alternatives: Acquiring a new dedicated platform for NBO, as is in place today, or connecting to a common platform through the Eurosystem’s T2, as other Nordic countries are now doing. With a dedicated platform, Norges Bank would be responsible for platform operations and security. With T2, Norges Bank would utilise a common settlement services platform, where the Eurosystem has this responsibility.
Under both alternatives, Norges Bank would maintain control of settlement in NOK as well as liquidity management and monetary policy implementation. Norges Bank has initiated the establishment of a national contingency solution for NBO. Such a solution will be necessary regardless of which platform is chosen for the next generation settlement system.
Operation of a stable, efficient and secure settlement system becomes more resource intensive with stricter security and contingency requirements, and with threat actors who can draw on large resources to launch sophisticated cyber attacks. At the same time, there are few service providers in the market for settlement systems. As neighbouring central banks have decided to migrate to T2, Norges Bank will no longer have the option of working with them in following up service providers and further developing a dedicated platform.
In Norges Bank’s view, the Bank would be better equipped to meet future requirements for security, contingency arrangements and functionality through participation in T2, which would also enable Nordic settlement systems to be developed in tandem.
Norges Bank is now entering into formal discussions with the ECB to commence a mutual exchange of information for necessary clarifications. Among other things, more information is needed for addressing certain remaining questions related to security and contingency arrangements. Designing an appropriate model for smaller banks’ participation in T2 is also necessary.
Norges Bank will continue its dialogue with other government bodies and involve the financial sector and other market participants where relevant. A final decision will be made once necessary clarifications have been addressed. Norges Bank expects that an agreement on participation in T2 could be ready at the end of 2025 at the earliest.
NBO - questions and answers
What is Norges Bank’s settlement system (NBO)?
In NBO, payments are settled between banks and other institutions in the financial sector that have an account at Norges Bank. NBO is the core of the Norwegian payment system, and the vast majority of payments in NOK are settled with finality in NBO. In 2024, daily settled payments averaged NOK 350bn.
What is T2?
TARGET Services are a number of services developed and operated by the Eurosystem, including T2 for payment settlement, T2S for securities settlement, the TIPS instant payment service and the ECMS security management service for EUR (from June 2025).
At the top of TARGET’s governance structure is the Governing Council, in which only euro countries participate. The Market Infrastructure Board (MIB) is responsible for the operation and development of the services. Central Banks participating with their own currencies hold two MIB seats on a rotational basis. Norges Bank will, like central banks in Sweden (the Riksbank) and Denmark (the Nationalbank), participate in the Non-Euro Currency Steering Group, which puts forth matters to the MIB.
What are the plans of the other Nordic central banks?
The Swedish and Danish central banks have decided to migrate from the settlement system service provider currently used by Norges Bank to the Eurosystem’s common T2 platform. The Bank of Finland already participates in T2, and the Central Bank of Iceland has made a strategic decision to do the same.
What would migrating NBO to the T2 platform entail?
Participation in T2 would entail Norges Bank using the Eurosystem’s settlement services. Norges Bank would retain control over settlement in NOK, liquidity management and monetary policy implementation. Norges Bank would also have overall responsibility for contingency preparedness and security in NBO. The T2 participation agreement is a contractual agreement and does not entail that Norway cedes any form of sovereignty.
What influence would Norges Bank have in the T2 steering bodies?
Norges Bank would have a limited say in the operation and development of T2. Norges Bank would work with the other Nordic Central Banks in steering bodies and working groups of TARGET Services, which T2 is a part of. Like Norges Bank, Eurosystem central banks have the same mission to promote a secure and efficient payment system, and T2 is managed under the same international CPMI-IOSCO principles (Principles for Financial Market Infrastructures) as NBO is today.
Would it be possible to settle payments in NOK if T2 were unavailable?
T2 has comprehensive continuity and contingency systems. The T2 platform has two operating locations – in Germany and Italy. Operations alternate between the two regions according to a schedule under which the inactive region is back-up for the active region. In addition, T2 has a contingency solution with basic functionality.
Norges Bank has begun work to establish a national contingency solution for NBO, which will be a back-up in situations when other solutions are unavailable. Such a solution will be necessary regardless of platform chosen for the next generation settlement system.
Will Norwegian personal data wind up abroad if we participate in T2?
The same personal data protection regulation applies across the EEA, which means that a transition to T2 would not affect personal data processing requirements.
Settlement system transaction data may include personal data, primarily customer transactions, which account for a minor share of turnover. T2 transaction data would be processed in Germany and Italy. Norges Bank would retain responsibility for the processing of personal data together with the other T2 central banks and the ECB, formalised in a Joint Controllership Agreement.
Contact:
Press telephone: +47 22 31 60 60
Email: presse@norges-bank.no