Main features

TARGET2 was developed in close cooperation with its future users. One of those users’ main requests was that the new system would offer a harmonised, state of the art payment service.

Detailed information on the main features is available in the TARGET2 documentation for professional use.

Technical infrastructure

Technical infrastructure of TARGET2

Technical infrastructure of TARGET2

Source: ECB.

TARGET2 is a single-platform system and therefore provides an enhanced, harmonised service. The system benefits from economies of scale which allows it to charge much lower fees and offer better cost-efficiency than the decentralised first-generation system. All participants – irrespective of where they are located – are offered the same high-quality services, functionalities and interfaces, as well as a single price structure.

A modular approach was adopted for the development of the Single Shared Platform (SSP). Every module in the SSP is closely related to a specific service. The Payments Module, for example, is used for the processing of payments.

Some of those modules (i.e. the Home Accounting Module, the Standing Facilities Module and the Reserve Management Module) can be used by the individual central banks on an optional basis. Central banks which do not use these modules offer the relevant services via applications within their own internal technical environments.

SWIFT standards and services (i.e. FIN, InterAct, FileAct and Browse) are used in the harmonised communication between the system and its participants.

Before the introduction of TARGET2, some central banks held "home accounts" (also called “proprietary home accounting systems”) outside their RTGS systems. These were used primarily to manage minimum reserves, standing facilities and cash withdrawals, but also to settle ancillary systems’ transactions.

It was agreed that, in the context of the new system, these types of transaction should ultimately be settled on the RTGS accounts held on the SSP. However, some countries’ domestic arrangements did not allow these operations to be moved rapidly to the SSP. As a result, the Eurosystem agreed on a maximum transition period of four years for moving the settlement of these payments to the SSP.

The Information and Control Module (ICM) allows direct users to access information and manage parameters linked to balances and payments online. Via the ICM, users have access to the Payments Module and the Static Data Management function. Users of the ICM are able to choose what information they receive and when. Urgent messages (e.g. system broadcasts from central banks and warnings concerning payments with a debit time indicator) are automatically displayed on the screen.

TARGET2 provides settlement services for a wide range of ancillary systems. While each of these used to have its own settlement procedure, TARGET2 now offers six generic procedures for the settlement of ancillary systems and allows these systems to access any account on the SSP via a standardised interface.

Liquidity management


The availability and cost of liquidity are two crucial issues for the smooth processing of payments in RTGS systems. In TARGET2, liquidity can be managed very flexibly and is available at low cost since fully remunerated minimum reserves – which credit institutions are required to hold with their central bank – can be used in full for settlement purposes during the day.

The averaging provisions applied to minimum reserves allow banks to be flexible in their end-of-day liquidity management. The overnight lending and deposit facilities also allow for continuous lliquidity management decisions. The Eurosystem provides intraday credit. This credit must be fully collateralised and no interest is charged.

However, all Eurosystem credit must be fully collateralised, i.e. secured by other assets. The range of eligible collateral is very wide. Assets eligible for monetary policy purposes are also eligible for intraday credit. Under Eurosystem rules, credit can only be granted by the national central bank of the Member State where the participant is established.

Banks’ treasury managers have a keen interest in the use of automated processes for the optimisation of payment and liquidity management. They need tools that will allow them to track activity across accounts and, where possible, make accurate intraday and overnight funding decisions from a single location – e.g. their head office.

TARGET2 users have, via the Information and Control Module, access to comprehensive online information and easy-to-use liquidity management features that meet their business needs.

Liquidity management features in TARGET2

TARGET2 has a range of features allowing efficient liquidity management, including payment priorities, timed transactions, liquidity reservation facilities, limits, liquidity pooling and optimisation procedures.

Payment priorities

TARGET2 payment priorities

Source: ECB.

Payment priorities

Payments can be assigned one of three priority levels: “normal”, “urgent” and “highly urgent”. Sending participants can influence the processing of queued normal and urgent (but not highly urgent) payments by changing their priority level or position in the relevant queue.

Timed transactions

TARGET2 allows payments to be submitted with a debit time indicator, which indicates the earliest or latest point in time that a payment should be settled. Unless participants have indicated a settlement time, payment orders are settled immediately. TARGET2 payments can be submitted to the central system up to five working days in advance.

Liquidity reservation

Participants have the option of reserving liquidity for urgent and highly urgent payments. Highly urgent payments can always use all of the liquidity available in an account. Where part of the overall liquidity is reserved for highly urgent payments, that part is no longer available for urgent and normal payments. It is also possible to reserve liquidity for the settlement of ancillary systems.


The system allows limits to be placed on outflows of liquidity from an account. They can be set on a bilateral or multilateral basis.

Liquidity pooling

Banking groups have the option of using a liquidity pooling functionality in order to view and/or use the liquidity in all of the accounts belonging to the various entities in the group.

Optimisation procedures

The settlement of queued payments is optimised on a continuous basis by means of several optimisation procedures. Those procedures search queues on a bilateral and multilateral basis to find pairs or groups of payments that can be settled on an “offsetting” basis given the amounts of liquidity available in the accounts of the relevant participants. In economic terms, offsetting has the same result as netting.



TARGET2 participation structure

TARGET2 participation structure

Source: ECB.

Access criteria for TARGET2

The access criteria for TARGET2 aim to allow broad levels of participation by institutions involved in clearing and settlement activities. Supervision by a competent authority ensures the soundness of such institutions. Supervised credit institutions established within the European Economic Area are the primary participants. Supervised investment firms, clearing and settlement organisations which are subject to oversight and government treasuries can also be admitted as participants.

Direct participants hold an RTGS account and have access to real-time information and control tools. Direct participants are responsible for all payments sent from or received on their accounts by themselves or any indirect participants operating through them.

Indirect participation means that payment orders are always sent to and received from the system via a direct participant, with only the relevant direct participant having a legal relationship with the Eurosystem. Finally, bank branches and subsidiaries can choose to participate in TARGET2 as multi-addressee access or addressable BICs (Bank Identifier Code).

TARGET2 operation times and closing days

TARGET2 is open for the processing of payments every working day from 7 a.m. to 6 p.m. C.E.T. A detailed description of the operational day in TARGET2 is included in Chapter 4 of the Information Guide for TARGET2 Users.

Calendar for TARGET2 closing days

  • New Year's Day,
  • Good Friday (Catholic/Protestant),
  • Easter Monday (Catholic/Protestant),
  • 1 May (Labour Day),
  • Christmas Day and
  • 26 December.