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Ireland settles euro through the Eurosystem TARGET Services: T2 (RTGS, replaced TARGET2 on 20 March 2023) for large-value, TARGET2-Securities (T2S) for securities, and TIPS for instant settlement; the Central Bank of Ireland operates the Irish component and provides settlement access. EURO1 (EBA CLEARING, a Systemically Important Payment System) is the principal private large-value net-settlement system, ultimately settling in T2. Following the Instant Payments Regulation, non-bank PSPs (PIs/EMIs) gained harmonised access to central-bank-operated payment systems including TARGET from October 2025. USD/GBP correspondent access for smaller Irish PSPs runs via Tier-1 correspondent banks.
That asymmetry has been structurally narrowed. Non-bank PSPs (PIs and EMIs) in Ireland gained TARGET access from October 2025, under the IPR's amendments to PSD2 and the Settlement Finality Directive making non-bank PSPs eligible to participate in designated payment systems; those meeting TARGET Guideline requirements can access TARGET Services including T2, broadening settlement access for Irish non-bank PSPs. Direct TARGET and T2 access for non-bank PSPs reduces dependency on bank sponsorship and reshapes settlement economics — the core analytical development for the module this cycle.
Outlook
The settlement-access trajectory is escalating. The October 2025 grant of direct TARGET and T2 access to qualifying non-bank PSPs is a structural change that narrows the long-standing bank versus non-bank asymmetry and reduces dependence on bank sponsorship. Ireland's reliance on Eurosystem central-bank-money settlement and the SIPS-designated EURO1 net-settlement layer remains the durable backbone. The forward question is how many Irish non-bank PSPs meet the TARGET Guideline requirements and convert eligibility into direct participation.
Correspondent Banking, Settlement & Access
The analytical spine of Ireland's correspondent-banking picture this cycle is the bank-versus-non-bank access asymmetry: licensed payment institutions and e-money institutions, unlike banks, do not have direct access to core settlement infrastructure and instead depend on safeguarding banking relationships with commercial banks to hold and protect customer funds. This dependency is now a named Central Bank of Ireland 2026 supervisory priority: the CBI's priorities include diversification of the safeguarding banks used by PIs and EMIs, a Probable-confidence finding that directly addresses concentration risk in this bank-dependency structure.
The diversification priority implies the CBI has identified an existing concentration among the banking relationships that Irish-licensed non-bank PIs and EMIs currently rely on for safeguarding, creating a structural vulnerability should any single safeguarding bank withdraw or restrict its relationship with multiple licensed firms simultaneously. This is consistent with the broader bank-versus-non-bank-PI/EMI distinction that structures correspondent-banking and settlement-access analysis generally: non-bank payment firms remain fundamentally dependent on bank intermediaries for settlement finality and fund safeguarding, regardless of their own direct regulatory authorisation status.
Outlook
Watch for the CBI's practical supervisory engagement with licensed PIs and EMIs on safeguarding-bank diversification through the remainder of 2026, and for any evidence of concentration among the specific safeguarding banks currently used by Ireland's non-bank payment sector.
1 earlier distinct update(s)
Correspondent Banking, Settlement & Access
The analytical spine of this module is the structural asymmetry between bank and non-bank access to payment systems, and PSD3/PSR materially narrows it. The new framework gives payment institutions clearer rights to access payment systems, including TARGET2 and instant-payment schemes, directly alongside banks, reducing non-bank PSPs' structural dependence on sponsor-bank relationships for settlement access. This access expansion is paired with, rather than offsetting, a tightened safeguarding regime: PSD3/PSR introduces mandatory diversification of safeguarded client funds across at least two credit institutions once a firm exceeds a defined threshold, recognises central-bank safeguarding accounts where available as an alternative or complement to commercial-bank segregation, and imposes formal daily reconciliation-evidence requirements alongside clearer insolvency ring-fencing. Both the access-rights expansion and the safeguarding tightening are sourced to a single Tier 4 vendor guide this cycle, so both should be treated as assessed rather than confirmed pending independent corroboration, though the direction is consistent with independent commentary characterising the same access-versus-supervision trade-off. The amendments to the Settlement Finality Directive that enable this direct non-bank participation in designated payment systems carry their own, shorter transposition and application window, six months, rather than PSD3's main eighteen-month body, meaning the correspondent-banking access improvement described here could land materially ahead of the broader PSD3/PSR implementation timeline.
Outlook
Watch for the Settlement Finality Directive amendments' shorter transposition window landing ahead of the main PSD3 body, since that would be the concrete signal that non-bank PSPs' TARGET2 and instant-payment-scheme access rights are becoming operative rather than remaining a stated entitlement. The tightened safeguarding regime, diversification across credit institutions, central-bank account recognition, and daily reconciliation evidence, is the compliance cost side of this same access expansion and should be tracked as a parallel, not offsetting, development for non-bank payment institutions and e-money institutions operating in or through Ireland.
Sources and findings (4)
- T3https://en.wikipedia.org/wiki/T2_(settlement_system)retrieved
- T1https://www.centralbank.ie/financial-system/payments-and-securities-settlements/target-services/t2retrieved
- T1https://www.centralbank.ie/docs/default-source/publications/quarterly-bulletins/quarterly-bulletin-signed-articles/money-and-payments-infrastructure.pdf?sfvrsn=2a44731a_6retrieved
- T1https://www.ecb.europa.eu/paym/retail/instant_payments/html/instant_payments_regulation.en.htmlretrieved