EXECUTIVE SUMMARY The oversight framework of the European Central Bank (ECB) is comprehensive. The ECB has developed a wide-ranging oversight policy, including quantitative and qualitative criteria to identify, monitor, and remedy any potential systemic risks related to financial market infrastructures. It has also developed oversight standards covering a broad range of infrastructures, service providers, and payment schemes within the euro area (EA). Furthermore, it has extensive oversight cooperation with a wide range of authorities both at the European level and globally. Within the European Union (EU), the ECB has been a driving force to promoting stability and integrating financial infrastructures. Globally, the ECB is deeply involved in shaping the regulatory framework for financial market infrastructures (FMIs) by assuming the leadership in developing new principles. It is also involved in several global cooperative oversight arrangements covering globally critical payment systems, posttrading FMIs, and the service provider SWIFT. The ECB should be entrusted to coordinate the Eurosystem oversight function to ensure that international principles for FMIs are consistently enforced throughout the EA. The regulation and oversight of systemically important FMIs has differed across the EA with potential contagion systemic risk affecting the stability of the EA financial system. The adoption of the PFMIs as legally binding is a step in the right direction. However, these principles are not sufficiently detailed to ensure a uniformed and harmonized implementation across the EA, since their enforcement for post trade FMIs will be conducted by national competent authorities on a decentralized basis (except for trade repositories, for which the supervisory responsibility lies with ESMA). Currently, the ECB is the lead overseer for payment systems, including TARGET2, EURO 1, STEP 2 and CLS (as concerns the settlement of euro transactions), but not for systemically important post-trade FMIs with crossborder reach. Therefore, there is merit in entrusting the ECB with responsibility to ensure that these principles are consistently enforced throughout the EA. Assuming such a role would strengthen financial stability across the EA by ensuring EA-wide policy objectives, harmonized regulation, and consistent implementation. The ECB should rely more on its power to issue legally binding corrective action to effectively enforce its oversight responsibilities. To implement its oversight responsibilities, the ECB currently relies mainly on ‘soft’ tools and measures such as moral suasion, publication of oversight assessments, public statements, and cooperation with other authorities. These tools have worked so far, but with more demanding oversight standards this may not be effective in all circumstances in forcing the system’s operators to promptly address potential deficiencies. The ECB should rely more on legally binding corrective action to effectively enforce its responsibilities, including imposing sanctions, penalty, suspending some operations or services, etc. As it does not have an exclusive mandate over post-trade FMIs, the ECB should coordinate its corrective measures with the relevant securities regulators and banking supervisors. Furthermore, the ECB should be actively involved in any EU legislation addressed to FMIs, as it would affect the effectiveness of its oversight responsibility.