12/05/2016 Publication
TARGET2 remains leading payment system
Market infrastructures constitute one of the three core components of the financial system, together with markets and institutions. The market infrastructure for payments1 consists of the set of instruments, networks, rules, procedures and institutions that ensure the circulation of money. The principal objective of this segment of the financial system is to facilitate the execution of transactions between economic agents and to support the efficient allocation of resources in the economy.
The Eurosystem has the statutory task of promoting the smooth operation of payment systems. This is crucial for a sound currency, for the conduct of monetary policy, for the functioning of financial markets, and for supporting financial stability. A key instrument which the Eurosystem uses for carrying out this task2 is the provision of payment settlement facilities. To this end, the Eurosystem operates the TARGET2 system, the second-generation Trans-European Automated Real-time Gross settlement Express Transfer system3 for the euro.
In May 2008 TARGET2 replaced the first-generation system, TARGET, which was created in 1999 by the Eurosystem for the settlement of large-value payments in euro, offering a central bank payment service across national borders in the European Union (EU).
TARGET was developed to meet three main objectives:
1. to provide a safe and reliable mechanism for the settlement of euro payments on a real-time gross settlement (RTGS) basis;
2. to increase the efficiency of inter-Member State payments within the euro area; and, most importantly,
3. to serve the needs of the monetary policy of the Eurosystem.
Similarly to its predecessor, TARGET2 is used for the settlement of payments connected with monetary policy operations, of interbank payments, and of transactions related to other payment and securities settlement systems (i.e. ancillary systems). As TARGET2 provides intraday finality, i.e. settlement is final for the receiving participant once the funds have been credited, it is possible to reuse these funds several times a day. Since June 2015 TARGET2 participants have also been able to open dedicated cash accounts on the TARGET2-Securities (T2S) platform4 , which they can use to settle their securities transactions.
TARGET2 offers harmonised services at the EU level and a single pricing structure. It provides ancillary systems with a harmonised set of cash settlement services and supports its users with enhanced liquidity management tools. In this manner, it contributes to financial integration, financial stability and liquidity efficiency in the euro area. TARGET2 is accessible to a large number of participants. More than 1,700 credit institutions in Europe use TARGET2 to make payments on their own behalf, on behalf of other (indirect) participants or on their customers’ behalf. Taking into account branches and subsidiaries, more than 55,000 banks worldwide (and thus all of the customers of these banks) can be reached via TARGET2.
Read here full TARGET Annual Report 2015
page source http://www.ecb.europa.eu/
