Everything about Target totally explained
TARGET (
Trans-European
Automated
Real-time
Gross Settlement
Express
Transfer System) was an interbank payment system for the real-time processing of cross-border transfers throughout the
European Union. It included 16 national
real-time gross settlement (RTGS) systems and the
ECB payment mechanism (EPM). TARGET provided access to more than 1,000 direct participants and more than 48,000 credit institutions (including branches and subsidiaries). In November 2007 it was replaced by TARGET2 (see below).
Infrastructure
TARGET itself is not, strictly speaking a funds transfer system, in that transfers can't be fed into TARGET directly; it merely links existing national systems. TARGET provides interlinking and security components via which the national systems can communicate.
TARGET is mainly used for individual payments between banks, but it's also used for urgent transfers between companies, or even individuals, at the discretion of the banks involved. Communication between the national systems mainly use the
SWIFT network.
Participants
As of November 2006, the participants were the EU15 countries and the ECB, plus Poland, Slovenia, and Estonia. The Polish and Estonian systems are connected indirectly via the Italian system, New BIREL. Slovenia (20 banks plus the Slovenian central bank) are connected direct to the German RTGSplus system.
Volume
In June 2006 there were over 7 million TARGET payments, with a total value of over 47,000 billion euros
TARGET holidays
The TARGET system is closed on Saturdays and Sundays and on the following public holidays in all participating countries:
New Year (
January 1),
Good Friday,
Easter Monday,
Labour Day (
May 1), and the first and second days of
Christmas (December 25 and December 26).
TARGET2
TARGET2 is the joint gross clearing system of the
ESCB that unifies the technical infrastructure of the 26 central (note-issuing) banks of the European Union. It went live on November 19th, 2007. However, Sweden and the UK have elected not to participate in TARGET2 - banks in these two countries will have to use alternative means to make large cross-border euro payments. Indeed,
Lloyds TSB,
Standard Chartered and
HSBC have decided to participate through the Dutch central bank
DNB.
Migration to TARGET2
The implementation of TARGET2 is based on a decision of the ECB Council of Autumn 2002 and is maintained by the three central banks of France (
Banque de France), Germany (
Bundesbank) and Italy (
Banca d'Italia). For the migration, the following four groups of participating countries have been defined:
Belgium
Finland
France
Ireland
Netherlands
Portugal
Spain
Denmark
Estonia
ECB
Greece
Italy
Poland
for unforeseen circumstances
Currently the first two groups were connected as planned.
Transaction prices for TARGET2
Transaction prices have still to be decided (as of November 2006), but the ECB has proposed two parallel schemes:
EUR 100 per month plus EUR 0.80 per transaction
EUR 1,250 per month plus EUR 0.20 to EUR 0.60 per transaction (depending on the volume of transactions)Further Information
Get more info on 'Target'.
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