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The Settlement Finality Directive is amended (via the PSD3/PSR package) to permit payment institutions and EMIs direct participation in designated payment systems, a material access change relative to the bank-only status quo.
The underlying infrastructure is TARGET Services, comprising T2 for large-value, T2S for securities, TIPS for instant and ECMS for collateral, forming the backbone of Europe's financial market infrastructure. The Eurosystem is considering moving T2 toward a 24/7 model. Correspondent-banking retrenchment, driven by compliance, geopolitical and operating costs, remains a structural cross-border pressure — the legacy asymmetry against which the non-bank access widening should be read.
Outlook
The trajectory is escalating. The non-bank T2/TIPS access change is the single most structurally significant EEA development of this baseline, and its competitive consequences will play out as PIs and EMIs operationalise direct access. The forward item is the T2 24/7 operating-hours consultation outcome, expected during 2026.
Correspondent Banking, Settlement & Access
Access to payment accounts held at credit institutions is a structural dependency for payment institutions, which generally do not hold banking licences themselves and therefore rely on credit institutions for settlement, correspondent-style account access, and the underlying banking relationships that safeguarding and settlement both depend on. The agreed, though not yet adopted, Payment Services Regulation text addresses this dependency directly. The Council's compromise text of 17 April 2026 would require credit institutions to provide access to payment accounts to payment institutions, their agents, and applicants for authorisation as a payment institution, on an objective, non-discriminatory and proportionate basis. The same agreed text would impose a one-month deadline for credit institutions to notify a refusal of account access, and a four-month notice period before any closure of an existing account-access arrangement. This is a direct response to long-standing de-risking pressure, where credit institutions have in practice declined or withdrawn account access from payment institutions on risk-appetite grounds without a structured notice or justification process.
Because this account-access provision sits within the still-unadopted Payment Services Regulation, it does not yet bind credit institutions, and payment institutions currently negotiating or maintaining sponsor-bank relationships for settlement access do so without the benefit of the proposed one-month refusal-notification deadline or four-month closure-notice period. The current legal position leaves credit institutions with comparatively greater discretion over account-access decisions affecting payment institutions than the agreed future text would permit.
This structural dependency on sponsor-bank relationships for settlement access is distinct from, but closely connected to, the safeguarding questions addressed elsewhere this cycle. A payment institution's ability to maintain properly segregated safeguarding accounts, as required under PSD2 Article 10(1) and clarified by the ECB and EBA guidance on settlement-account treatment, itself depends on maintaining the underlying banking relationship that the agreed Payment Services Regulation account-access provision is designed to protect. De-risking pressure that threatens account access therefore threatens safeguarding compliance as a direct consequence, not merely an indirect one, which is the analytical basis for treating this as a structural correspondent-banking and settlement constraint rather than an isolated access dispute.
Outlook
The account-access protections in the agreed Payment Services Regulation text, including the one-month refusal-notification deadline and the four-month closure-notice period, remain contingent on the file's still-outstanding formal adoption, tracked toward an indicative plenary vote of 14 December 2026. Until that adoption and the subsequent application period elapse, payment institutions dependent on sponsor-bank account access for settlement purposes continue to operate under the existing, less structured account-access regime, with no fixed notice or justification requirement binding the credit institutions on which that access depends.
2 earlier distinct update(s)
Correspondent Banking, Settlement & Access
The defining development in correspondent banking and settlement access this cycle is the amendment of the Settlement Finality Directive as part of the PSD3/PSR package, which now permits payment institutions and e-money institutions to participate directly in designated payment systems. This right had previously been reserved to banks, meaning non-bank payment service providers were required to access settlement infrastructure indirectly, typically through a sponsoring bank relationship. The amendment is confirmed with high confidence via primary legal-commentary tracking of the compromise texts and represents a direct structural break from the bank-only settlement-access model that has defined correspondent and settlement relationships across the EEA payments market to date.
The analytical spine of this development is precisely that bank-versus-non-bank access asymmetry. Under the prior regime, a payment institution or e-money institution seeking finality-protected access to a designated payment system had no direct route and depended on a bank counterparty willing to sponsor that access, a dependency that shaped correspondent-relationship pricing, concentration risk and operational resilience for the non-bank payment sector as a whole. The amendment does not abolish correspondent banking relationships outright, but it removes the structural requirement that non-bank payment service providers rely on them for settlement-system access specifically, which is the more consequential half of the correspondent relationship for many payment institutions and e-money institutions.
This settlement-access change should be read alongside the broader PSD3/PSR licensing consolidation described elsewhere in this brief: the same package that merges e-money institutions into the payment-institution category as a sub-type also extends that merged categorys settlement rights, meaning the newly unified non-bank payment-institution category gains both a simplified authorisation status and, for the first time, a direct settlement-access right previously withheld from both of its constituent parts.
No further correspondent-banking developments, such as changes to nostro-vostro relationship management practices or bank de-risking patterns affecting EEA payment institutions, surfaced this cycle beyond the Settlement Finality Directive amendment itself.
Outlook
The practical uptake of direct settlement-system participation by payment institutions and e-money institutions, once the amended Settlement Finality Directive takes effect alongside the wider PSD3/PSR framework, is the development to watch. Sponsoring banks that currently provide indirect settlement access to non-bank payment service providers should expect commercial pressure on that intermediation role as direct participation becomes a genuine alternative for at least the larger and better-capitalised payment institutions and e-money institutions.
Correspondent Banking, Settlement & Access
The defining structural feature of correspondent banking and settlement access in the EEA this cycle is the bank-versus-non-bank access asymmetry, and this cycle records a material move to narrow it. Since October 2025, non-bank payment service providers meeting TARGET Guideline requirements have been able to access TARGET Services directly, both T2 for payment settlement and TIPS for instant-payment settlement, under a harmonised Eurosystem access policy. This is a Tier-1, high-confidence finding sourced directly to the European Central Bank.
Prior to this harmonised access policy, non-bank PSPs seeking instant or high-value settlement typically depended on a correspondent or agency-bank relationship with a directly-participating bank, a dependency that carries both cost and de-risking exposure, since correspondent banks retain discretion to terminate or restrict access to non-bank PSP clients they assess as higher-risk or lower-margin. Direct TARGET Services access removes that intermediation step for non-bank PSPs that meet the TARGET Guideline eligibility requirements, which is a structural de-risking-mitigation development: a non-bank PSP with direct settlement access is no longer solely dependent on a correspondent bank continuing relationship for its core settlement function, even though it may still rely on correspondent banks for other cross-border or non-euro functions.
This access change should be read as structural rather than incidental. It does not eliminate the underlying asymmetry between bank-PSPs, which have always had direct central-bank settlement access as an incident of their banking licence, and non-bank PSPs, for whom direct access has historically been unavailable regardless of scale or risk profile; but it does narrow the asymmetry specifically for the instant-payment and core payment-settlement functions that TARGET and TIPS cover, which is where the practical correspondent-dependency cost has historically been most acute for non-bank PSPs processing high transaction volumes.
Outlook
The practical question going forward is one of take-up: how many eligible non-bank PSPs move from correspondent-bank-intermediated settlement to direct TARGET Services access, and over what timeframe, is not established by the material identified this cycle, which confirms the policy change but not adoption data. The correspondent-banking de-risking dynamic that direct access is intended to mitigate remains a live background condition even as the harmonised access policy narrows its practical bite for the specific instant-payment and core-settlement functions TARGET and TIPS cover.
1 further periodic run re-emitted the standing brief unchanged and is not shown.
Sources and findings (4)
- T1ECB (Tier-1)
- T2EBA CLEARING (Tier-2) / inventi
- T1ECB (Tier-1)
- T1ECB Economic Bulletin (Tier-1, citing FSB/BIS)