Forerunner: TARGET

History

TARGET began operations on 4 January 1999 at the same time as the launch of the euro. Since then, TARGET has provided a real-time payment processing service with intraday finality to almost all credit institutions in the European Union (EU).

Moreover, TARGET serves the monetary policy needs of the Eurosystem and promotes the integration of the euro money market as well as the harmonisation of business practices in the EU. With its special focus on large-value payments related to interbank operations, TARGET helps to reduce systemic risk.

Reasons for developing the next generation

Despite its achievements, TARGET has a number of shortcomings that stem from its heterogeneous technical design. In view of this, and because of developments such as the further enlargement of the euro area, the Governing Council of the ECB decided in October 2002 to build the second generation of TARGET. They decided to name it TARGET2. The objective was to better meet user needs by

• providing a harmonised service level with a harmonised pricing scheme;
• ensuring cost-efficiency; and
• preparing for future developments, including the enlargement of the EU and the euro area.