Banco de Portugal TARGET balance, an accounting position representing a liability towards the European Central Bank arising from net cross-border payments in central bank money settled via the TARGET2 payment system, was the largest item on Banco de Portugal balance sheet by the end of 2018. In this paper, we depict the evolution and explain the main underlying drivers of Banco de Portugal TARGET liability since the beginning of Stage III of the EMU, following two perspectives, one based on Banco de Portugal balance sheet and other on the Portuguese Balance of Payments. We find that the evolution of Banco de Portugal TARGET liability is highly related with the volume of liquidity-providing monetary policy operations, although the underlying drivers evolved throughout the time: demand driven in 2011/2012 and supply driven from 2015 onwards. We find no time-invariant causal link between Banco de Portugal TARGET liability and neither financial market stress indicators nor the net financing needs of the Portuguese economy. We corroborate our findings empirically using simple OLS regressions.