Germany: Correspondent Banking, Settlement & Access

Correspondent Banking, Settlement & Access

The analytical spine of W12 is the access asymmetry between bank and non-bank payment service providers in the correspondent-banking and settlement-account context. This cycle's signal for Germany is concentrated in the tension between PSD3's optional central-bank safeguarding account mechanism and the ECB's institutional scepticism about that mechanism — a tension that has direct implications for how the bank versus non-bank access asymmetry evolves under the new regulatory framework.

The Bank vs Non-Bank Access Asymmetry

Credit institutions in Germany have direct access to Bundesbank settlement accounts and the TARGET2/T2 infrastructure. Non-bank payment institutions — PIs and EMIs authorised under the ZAG — do not have equivalent direct access. They depend on credit institutions for correspondent-banking services, including the maintenance of safeguarding accounts in which client funds must be held. This structural dependency creates a persistent access asymmetry: non-bank PIs and EMIs are operationally dependent on the willingness of credit institutions to provide and maintain correspondent-banking relationships, and that willingness has been inconsistent across the German market.

PSD3 was designed in part to address this asymmetry. One of its headline access-improvement tools is the optional mechanism allowing payment institutions to safeguard client funds in a central-bank account, rather than relying exclusively on credit-institution accounts or qualifying liquid assets. If operationalised, this mechanism would reduce non-bank PIs' dependency on credit institutions for safeguarding purposes, partially addressing the access asymmetry.

ECB Scepticism: Decision ECB/2025/2

ECB Decision ECB/2025/2, issued on 27 January 2025, expressed institutional scepticism about whether central-bank safeguarding accounts could impact overall systemic safety. The ECB's concern appears to centre on the systemic implications of large-scale non-bank PI fund flows being held directly at central banks, which could affect the structure of central-bank balance sheets and the transmission of monetary policy. This is a substantive institutional position, not a procedural objection, and it creates a significant uncertainty about whether the Bundesbank — as the relevant national central bank for German PIs — will in practice offer safeguarding accounts to non-bank PIs under the PSD3 optional mechanism.

The PSD3 text does not require central banks to offer such accounts; the mechanism is optional for central banks as well as for PIs. The ECB's scepticism therefore operates as a practical constraint on the availability of the mechanism, even if PSD3 formally provides for it. For German non-bank PIs and EMIs, this means that the central-bank safeguarding account option — which appeared in the PSD3 text as a potential solution to the correspondent-banking access problem — may not be available in practice, at least not without further clarification of the ECB's and Bundesbank's operational posture.

The Bundesbank's existing arrangements carry conceptual precedent for safeguarding-adjacent structures, but that precedent does not resolve the ECB's systemic-safety concern. The tension between PSD3's access-improvement intent and the ECB's institutional position is unresolved as of this cycle and will need to be watched through the transposition process.

Implications for German PI/EMI Operating Models

For German non-bank PIs and EMIs, the practical implication of this tension is that the correspondent-banking access asymmetry is unlikely to be resolved by the central-bank safeguarding account mechanism in the near term. Firms should not plan their safeguarding architecture on the assumption that Bundesbank accounts will be available. The alternative safeguarding routes — credit-institution accounts and qualifying liquid assets — remain the operative options, with all the access-dependency risks that entails.

The coverage gap on DE-specific insolvency-law primary sources for PSD3 safeguarding ring-fencing provisions is noted. The analysis of safeguarding insolvency protection in this module relies on general PSD3/PSR secondary sources; no DE-specific insolvency-law primary source was located this cycle.

Outlook

The ECB-PSD3 safeguarding tension is the primary W12 development to track for Germany. Resolution will depend on the ECB and Bundesbank clarifying their operational posture on central-bank safeguarding accounts during the PSD3 transposition process. Until that clarification is available, the bank versus non-bank access asymmetry in the German correspondent-banking context remains structurally unresolved. The insolvency-law coverage gap is carried forward.