TARGET2 (Trans-European Automated Real-time Gross Settlement Express Transfer System) is the RTGS owned and operated by the Eurosystem. The Eurosystem is the monetary authority of the Eurozone; it consists of the European Central Bank (ECB) and the national central banks of the Eurozone countries.
TARGET2 is used by central banks and commercial banks to process euro payments in real-time enabling the free flow of money across the Eurozone. It is a payment system that enables EU banks to transfer money between each other in real time.
It’s mandatory to use TARGET2 when settling euro payments that involve the Eurosystem. It was introduced in 2007 replacing the older TARGET (Trans-European Automated Real-time Gross Settlement System) system. In 2020, it processed over 92 billion transactions with a total value of approximately €152 trillion
How does it work?
Who uses TARGET2?
It is used by central banks and commercial banks.
- Central banks will use it to manage liquidity and facilitate the flow of funds between financial institutions.
- Commercial banks within the eurozone will use it to settle large value transactions. A full list of participants can be found here