TARGET Services (for Transeuropean Automated Real-time Gross-settlement Express Transfer) are payment services operated by the

Eurosystem The Eurosystem is the monetary authority of the eurozone, the collective of European Union member states that have adopted the euro as their sole official currency. The European Central Bank (ECB) has, under Article 16 of its Statute,

for the

euro area The euro area, commonly called the eurozone (EZ), is a currency union of 20 member states of the European Union (EU) that have adopted the euro (€) as their primary currency and sole legal tender, and have thus fully implemented EMU pol ...

and beyond on its proprietary

financial market infrastructure Financial market infrastructure refers to systems and entities involved in Clearing (finance), clearing, Settlement (finance), settlement, and the recording of payments, Security (finance), securities, Derivative (finance), derivatives, and other ...

s. As of late 2024, TARGET Services included T2 for large payments (which replaced

TARGET2 TARGET2 was the real-time gross settlement (RTGS) system for the Eurozone from its phased introduction in 2007-2008 until its replacement with T2 in March 2023. As such, it was one of the Eurosystem's TARGET Services, replacing the original TAR ...

in 2023),

TARGET2-Securities TARGET2-Securities, in shorthand T2S, is the Eurosystem's platform for securities settlement in central bank money. T2S offers centralised delivery-versus-payment (DvP) settlement across several European securities markets, without being itself ...

(T2S) for securities transactions, and

TARGET Instant Payment Settlement TARGET Instant Payment Settlement or TIPS is a TARGET Service of the Eurosystem that allows the settlement of instant payments in central bank money. The acronym TARGET stands for Trans-European Automated Real-time Gross-Settlement Express Transf ...

(TIPS) for instant payments. A fourth service, the

Eurosystem Collateral Management System The Eurosystem Collateral Management System (ECMS) is a unified platform for collateral management in the Eurosystem, intended to support the effectiveness of monetary policy in the euro area. It is one of the Eurosystem's TARGET Services, togethe ...

(ECMS), is to complement the TARGET suite in mid-June 2025.

History

In 1993, as the

Maastricht Treaty The Treaty on European Union, commonly known as the Maastricht Treaty, is the foundation treaty of the European Union (EU). Concluded in 1992 between the then-twelve Member state of the European Union, member states of the European Communities, ...

entered into force, central banks of the EU agreed that all of them should have an

real-time gross settlement Real-time gross settlement (RTGS) systems are specialist funds transfer systems where the transfer of money or securities takes place from one bank to any other bank on a "real-time" and on a " gross" basis to avoid settlement risk. Settlement ...

(RTGS) system, as some had already done in the previous decade. In 1995, they decided to interlink these national infrastructures through a pan-European system that they called TARGET. That original TARGET system duly began operations on . Its first version had a decentralized structure that consisted of the national RTGS systems of the 12 euro area member states plus those of Denmark (KRONOS), Sweden (E-RIX), and the UK (CHAPS) together with the ECB Payment Mechanism (EPM). On ,

Poland Poland, officially the Republic of Poland, is a country in Central Europe. It extends from the Baltic Sea in the north to the Sudetes and Carpathian Mountains in the south, bordered by Lithuania and Russia to the northeast, Belarus and Ukrai ...

was the first new EU member state following the 2004 enlargement to connect to TARGET, via its SORBNET-EURO RTGS system operated by the

National Bank of Poland The Narodowy Bank Polski (; the National Bank of Poland), often abbreviated to NBP, is the central bank of Poland, founded in 1945. It controls the issuing of Poland's currency, the Polish złoty. The bank is headquartered in Warsaw, and has bra ...

. The first TARGET was replaced with

, a more centralized system based on a Single Shared Platform (SSP), in stages from November 2007 to May 2008. In addition to euro area countries and those that would adopt the euro in subsequent years (namely Cyprus, Malta, Slovakia and the Baltic countries), Denmark and Poland participated in the migration to TARGET2, whereas Sweden and the UK did not. On , Romania also connected to TARGET2. In June 2015, TARGET2 participants were first allowed to open a Dedicated Cash Account (DCA) on the T2S platform, marking the start of the T2S service. In October 2018, T2S allowed settlements in

Danish krone The krone (; plural: ''kroner''; sign: kr.; code: DKK) is the official currency of Denmark, Greenland, and the Faroe Islands, introduced on 1 January 1875. Both the ISO code "DKK" and currency sign "kr." are in common use; the former precedes ...

s (DKK) in addition to those in euros. TIPS was introduced in November 2018. On , Sweden completed its integration into TIPS, allowing for TIPS to also settle instant payments in

Swedish krona The krona (; plural: ''kronor''; sign: kr; code: SEK) is the currency of Sweden. Both the ISO code "SEK" and currency sign "kr" are in common use for the krona; the former precedes or follows the value, the latter usually follows it but, espec ...

s. TARGET2 was replaced with T2 in March 2023. T2 and TIPS will also allow settlements of DKK payments in March 2025.

Legal structure

While technically integrated at the European level since the transition to TARGET2 in 2008, TARGET Services are based on contractual arrangements between participants and national entities known as TARGET components. The contractual conditions are harmonized in a formal Eurosystem document known as the TARGET Guideline last updated in 2022.

Controversy

TARGET2 imbalances

During the

euro area crisis The euro area crisis, often also referred to as the eurozone crisis, European debt crisis, or European sovereign debt crisis, was a multi-year debt crisis and financial crisis in the European Union (EU) from 2009 until, in Greece, 2018. The ...

of the 2010s, cross-country imbalances within the TARGET2 system became an object of heated discussion, particularly in Germany.

Outage

In October 2020, TARGET2 and T2S experienced an outage for nearly 11 hours.Fairless, Tom
"Europe’s Core Payments Network Disrupted by Technical Malfunction"
, ''Wall Street Journal'', October 28, 2020
re: Euronext's Oct. 2020 outages in WSJ
Retrieved 2020-10-28.

References