From February 2020 the Bank of Lithuania (Central Bank) has extended the capabilities of CENTROlink system previously used only for the transferring of Euro (EUR) payments withing Single Euros Payment Area (SEPA). Upgraded system goes beyond SEPA zone and opens a gateway to TARGET2 accessing more than 55,000 banking institutions in EU/EEA area and worldwide. TARGET2 system owned and operated by the Eurosystem consisting from Euro zone central banks and the European Central Bank (ECB).
Payment and electronic money institutions get access to TARGET2
Upgraded CENTROlink allows financial services providers such as Payment Institutions (PI) and Electronic Money Institutions (EMI) send and receive real-time payments via the TARGET2. System is based on an integrated central technical infrastructure, called the Single Shared Platform (SSP). EU/EEA banks have clearing accounts in TARGET2. Other international banks access TARGET2 through their branches in EU/EEA states or through their correspondent banking network. More than 55,000 banks worldwide can be reached via TARGET2. Lithuanian licensed credit institutions, as well as PI’s and EMI’s allowed to access the system and settle EURO-denominated domestic and international payments.
Individual IBAN generation and safeguarding of client funds
Even before the upgrade CENTROlink Lithuanian Fintech’s enjoyed the possibility to process EUR payments in SEPA zone at low cost and possibility generate individual IBAN format client accounts. Moreover, system allows to safeguard client funds in the Bank of Lithuania – Central Bank of Euro Zone state. CENTROlink connection made Lithuanian EMI’s and PI’s equal to the commercial banks in EUR payment processing and do not require additional segregated client funds account with commercial banks.
As the Bank of Lithuania announces, in 2019, nearly 43 million payments were made within CENTROlink, a payment system operated by the Bank of Lithuania, with their value reaching EUR 88 billion.
CENTROlink managed by the Bank of Lithuania grants global reach
“TARGET2 allows transfer EUR funds using single interface, permits a high degree of cost-effectiveness and relatively cheap single pricing system. Formally remaining the European system TARGET2 gives the global reach going beyond the European borders and non-banks are welcome to use it”, says Kęstutis Kvainauskas, attorney at law of ECOVIS ProventusLaw firm specializing in servicing of FinTech institutions.
TARGET2 is the Eurosystem’s interbank funds transfer system, which is designed to support the Eurosystem’s objectives of defining and implementing the monetary policy of the euro area and promoting the smooth operation of payment systems, thus contributing to the integration and stability of the euro money market.
TARGET2 is technically based on a Single Shared Platform (SSP), offering the same level of service to all users. It has been designed and built to meet the highest standards of robustness and operational reliability and is able to process equally smoothly domestic and cross-border payments denominated in euro. TARGET2 processes only transfers denominated in euro. The aim is to allow payments – especially large-value payments such as those relating to foreign exchange, securities and money market transactions – to be made in euro at low cost with high security and very short processing times.