TARGET 2

In October 2002 the Governing Council of the European Central Bank defined the long-term strategy for TARGET and decided to create TARGET2, the second generation of the TARGET system. This decision aimed at addressing the increasing challenges faced in Europe in the field of payment systems and at contributing to its financial integration.

TARGET2 is the new real-time gross settlement system (RTGS) for the Eurosystem and is based on a single shared platform. It replaced the previous decentralised system (1).

This new system was developed in close co-operation with the user community, performing functions adapted to the participants’ business needs.

One major advantage of TARGET2 is the fact that is it based on a single platform, with harmonised and efficient interfaces, procedures and prices for the euro area as a whole.

This harmonisation, which is based on the best current standards and practices, enables the use in a cost-effective and efficient manner of modern processing and liquidity management mechanisms in central bank money. Such mechanisms are adjusted to the requirements of the various market participants and accommodate a rapid adaptation to future developments (particularly in the context of European Union enlargement).

For further details on TARGET2, see Associated Documents.

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(1) Although, in legal terms, TARGET2 is comprised of a series of components decentralised by country and harmonised in every aspect that does not conflict with national law. In the case of Portugal, the system was formalised through Instruction of Banco de Portugal No 33/2007, which established the TARGET2-PT system.