Exclusive-How ECB dodged a payment disaster in 10 hours of tech meltdown

Francesco Canepa and Lefteris Papadimas

Thu, Mar 6, 2025, 2:33 a.m. 6 min read

By Francesco Canepa and Lefteris Papadimas

FRANKFURT/ATHENS (Reuters) - The European Central Bank's payments crash last week meant salaries and welfare funds were delayed for thousands of people. It could have been much worse.

If the same disruption had struck, or persisted into, the following day - the end of the month, and payday for many public-sector workers, pensioners and welfare recipients - the mayhem could have hit millions of people and businesses, and strained the banking system.

"If it had lasted until Friday, there would have been big risk-management questions for banks," said Alistair Milne, a professor of financial economics at Britain's Loughborough Business School. "Bank risk managers would have to decide: Are we willing to credit the customer account on the trust that the money will eventually turn up?"

Reuters can construct the most detailed account to date of the breakdown of the euro zone's main payment system, based on interviews with a dozen people familiar with the day's events including central bank officials, bankers and brokers, and a review of the ECB's messages to market participants.

When the system went down on Thursday, the chaos that descended in the 10 hours it took to identify and fix the problem blocked the welfare payments of more than 15,000 mostly elderly and poor Greeks, a large number of salaries and pensions in Austria, plus several financial trades.

At the heart of the escalating turmoil was a piece of malfunctioning hardware, but it took hours for the ECB's technicians to spot the problem after an initial, erroneous diagnosis of database issues, according to the ECB messages and officials at the ECB and three other euro zone central banks.

This forced central bank staff across many euro zone countries to work throughout the night to fix the defective equipment and clear a backlog of transactions in time for payday, according to officials who like the other sources requested anonymity to discuss this sensitive matter.

"A hardware failure is excusable, but not having a backup that can kick-in instantaneously in case of problems is not," said Markus Ferber, a member of the European Parliament who sits on the committee that oversees the ECB. "Critical infrastructure needs a backup - the ECB should know that."

An ECB official told Reuters the affected hardware, which he declined to identify, did have multiple backups and the bank was analysing why they didn't kick in.

The ECB had recently completed an overhaul of its payment system and crisis management before this incident, the official added, as recommended in a report by consultancy Deloitte following a string of outages in 2020.