The German stopper finds himself surplus to requirements at Barcelona following their £25m capture of Joan Garcia from Espanyol. Barcelona's willingness to invest heavily in Garcia signals ter Stegen's Camp Nou days are numbered, with the 33-year-old reportedly feeling pushed aside by the Catalan giants.
City have identified ter Stegen as a potential solution to their own goalkeeping predicament. Ederson's contract expires next summer and the Brazilian has attracted serious interest from Saudi Arabia. With no extension talks progressing, City face the prospect of losing their first-choice keeper.
Sources suggest Barcelona are prepared to entertain offers for ter Stegen, who remains under contract until 2028. The Germany international's decade-long association with Barcelona appears to be souring, particularly after tensions emerged over his attitude during the final weeks of last season.
Chelsea had previously made enquiries about ter Stegen before pursuing AC Milan's Mike Maignan. That deal has stalled, potentially opening the door for a renewed Chelsea approach. However, City's financial muscle and Guardiola's pulling power could prove decisive.
Manchester United have also registered interest in ter Stegen as they consider alternatives to the hapless Andre Onana. Scruffy Jim and the other Old Trafford hierarchy remain unconvinced by the former Ajax man's performances since his £47m arrival.
City now face competition from their cross-town rivals in what promises to be a fascinating summer transfer battle. Guardiola's history of working with technically gifted keepers suggests ter Stegen would fit seamlessly into City's possession-heavy system.
The German's vast experience at the highest level appeals to City's recruitment team. His Champions League pedigree and La Liga success make him an attractive proposition for a club targeting domestic and European glory.
Barcelona's decision to marginalise ter Stegen represents a significant shift in their goalkeeping hierarchy. Garcia's arrival effectively ends the German's status as undisputed number one, forcing him to consider his options.
City's interest intensifies the goalkeeper carousel expected this summer. With several top clubs seeking new stoppers, ter Stegen's availability creates an opportunity too good to ignore for the Blues.