petar chobanov : development and innovation in the payments and securities settlement sector publication by mr petar chobanov, deputy governor of the bulgarian national bank, in the quarterly bulletin of the association of banks in bulgaria, sofia, 17 october 2023. * * * in recent years, bulgaria has seen quite a positive progress both in the field of payments and in the settlement of securities. this progress is systematic and purposeful, being generated on the one hand by technological innovations in the field of payments and the changing needs of consumers, and on the other hand by the evolution of regulatory requirements and standards. the process of preparing the introduction of the euro in the country plays the role of a catalyst for accelerating the course of renewal and development of the payment and settlement systems in bulgaria. this year, the bulgarian national bank ( bnb ), the banks, borica ad and central depository ad can report a good team result – a number of achievements with respect to the projects related to the preparation for the euro area accession. first of all, we should mention the migration to the new consolidated platform for target services of the eurosystem, which the bnb carried out in march this year jointly with the banking community in bulgaria, borica ad and central depository ad. this migration is the completion of a large - scale consolidation project of the previously existing target2 payment system and securities settlement platform target2 - securities, which was several years in the making and involved all countries operating national component systems in target2. the new consolidated platform target has become a stable foundation of the financial market infrastructure of the euro area and provides access to several services at the same time. the first is the real - time euro cash settlement service provided by the t2 payment system ( replacing target2 ), which consists of a real - time gross settlement system ( rtgs ) and a centralised liquidity management tool. the second service is for the settlement of euro - denominated securities, which is provided by target2 - securities ( t2s ), which offers pan - european settlement – of cash and securities, in central bank money. the third service in target is tips ( target instant payment settlement ), which provides access to instant payments in euro. the launch of the consolidated target platform made it possible to renew the existing systems and services of the eurosystem by introducing the latest technologies and standards, such as swift messages according to the iso 20022 xml standard, a harmonised access interface and common

not only increase resilience, but, by including assumed asset bubbles in their scenarios, they can also focus attention on specific assets, causing banking firms to build capital against unexpected losses in those assets. by focusing management attention on the downside risk posed by certain assets, and by increasing the share of capital in the funding mix, they can also lean against bank lending that supports inflated asset values. in addition, higher “ sector - specific ” risk weights and capital charges, applied to specific assets such as mortgages, potentially could be a more targeted way of addressing particular asset bubbles ; however, these more targeted capital tools require an early understanding of the particular asset class that may be involved in a potential bubble. whether financial regulators would be capable of spotting such specific asset bubbles early, and then of acting in a timely enough way to address such bubbles is, in my view, unlikely. liquidity regulation a second class of policies that addresses asset bubbles and their consequences is liquidity regulation. an example is the new basel iii liquidity coverage ratio. as i discussed earlier, an aspect of credit - driven asset bubbles is financial institutions ’ increased reliance on unstable short - term wholesale funding, a reliance that makes them vulnerable to heightened rollover risk, sudden losses of confidence, and funding runs. liquidity regulation increases the stock of cash or easily marketable securities available to institutions in the event of a funding run or margin call. liquidity regulation also discourages use of unstable short - term wholesale funding of illiquid longer - term assets in the first place. truly liquid assets, such as cash or treasury securities, are low - yielding, and being required to hold them means lower earnings. therefore, minimum liquidity requirements raise the cost, and so reduce the amount of, liquidity risk taking, reducing the chances of a liquidity crisis and asset fire sales. in that sense, minimum liquidity requirements also lean against building vulnerabilities that could accompany the growth of an asset bubble. indeed, regulators might vary liquidity requirements in a countercyclical way, with greater liquidity required during the development of credit - fueled asset bubbles, in order to regulate the amount of allowable maturity transformation. bis central bankers ’ speeches margins and haircuts a third class of policies that could be helpful in addressing credit - fueled asset bubbles is margins and haircuts on securities financing transactions. such transactions could include, for example, bilateral repurchase transactions in which a broker – dealer, in order to