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Third progress report on the TARGET project

12 November 1998

Today the European Central Bank (ECB) published a report entitled "Third progress report on the TARGET project" (pdf 174 kB).

The objective of the Report is to provide information concerning the progress made on the TARGET project since September 1997, the date on which the previous TARGET progress report was published. The Report covers policy aspects of TARGET as well as organisational and business aspects. It also describes the progress made on the technical implementation of the system and provides a brief overview of the legal framework for TARGET.

The Report outlines the access criteria for RTGS systems linked to TARGET, which have now been specified in detail, and states that remote access to settlement account facilities in TARGET will be permitted for institutions within the European Economic Area. However, it is not expected that extensive use will be made of the latter possibility.

The Report also sets out the detailed regime for the granting of intraday credit, with different provisions for: (1) ESCB monetary policy counterparts; (2) credit institutions participating in euro RTGS systems in EU countries outside the euro area; and (3) RTGS participants which are not credit institutions. Remote participants will not have access to intraday or overnight credit from the host central bank.

The Report notes that TARGET will play an important role in intraday liquidity management in euro. It will allow liquidity in euro to be moved very quickly between all EU countries. Today, credit institutions are used to dealing with domestic counterparts in the money market, but in Stage Three liquidity adjustments will take place partly on a cross-border basis. In this context, the ESCB expects that credit institutions will concentrate their core liquidity - and therefore their very high value payments, in particular money market payments - in TARGET. This will be in the business interest of credit institutions and will contribute to the ESCB objective of ensuring the singleness of the euro money market.

Further aspects which are addressed in the Report include the price structure for cross-border TARGET payments, bank-to-bank charges for customer payments in TARGET, the transmission of euro-related information during the changeover period, the handling of return payments and central bank correspondent banking relations.

With regard to the technical implementation of the TARGET project, the Report highlights that on 1 July 1998, as scheduled, all the national central banks (NCBs) and the ECB moved to the penultimate test phase known as simulation testing. The aim of the simulation phase is to test operations in an environment which is as close as possible to the production environment, integrating operational staff and operational infrastructures. Credit institutions have been invited to participate in end-to-end simulation testing on specified dates. The final test period will comprise migration to production tests and will take place in November and December 1998.

The Report describes the legal framework for TARGET, which will be based on: (1) a Guideline of the European Central Bank on TARGET, which will apply to euro area NCBs and the ECB; and (2) a TARGET Agreement, to be entered into by the ECB and the NCBs, which will govern relations between euro area NCBs and the ECB, on the one hand, and non-euro area NCBs and the ECB, on the other, as well as relations among non-euro area NCBs. For participants in a national RTGS system linked to TARGET, the applicable rules will continue to be the national RTGS rules applying to such systems, as amended to reflect the provisions of the Guideline and the Agreement. The Report also announces that the ECB and the NCBs are preparing an information guide for credit institutions using TARGET, which will be published in December 1998. This document is designed to assist credit institutions using TARGET in making the best use of the system.

The Report will be distributed by each of the EU National Central Banks to interested parties in their respective countries. It can be accessed via the ECB's Web site ( Copies are also available from the ECB at the following address:


European Central Bank

Directorate General Communications

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