TARGET (banking)

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The system TARGET (, engl. T rans-European A utomated R eal-time G ross Settlement E xpress T ransfer system , dt. About Trans-European Automated Real-time Gross Express settlement system ) under the auspices of the European Monetary Institute introduced. It is an infrastructure that is essential for the proper functioning of the single currency policy. Using TARGET, the European Central Bank and the national central banks of the euro zone are supposed to carry out their monetary policy in practice by adding or withdrawing liquidity from the system. The commercial banks should also use TARGET to make use of their arbitrage opportunities between the various financial centers and thus ensure the alignment of short-term interest rates and ultimately the consistency of currency policy. In this sense, TARGET is primarily a means of monetary policy in the euro area.

TARGET was also an interbank transfer system that has linked 16 national real-time gross payment systems in Europe since 1999 and was replaced by TARGET2 in November 2007 . The national gross payment system in Germany was RTGSplus from November 2001 to November 2007 (previously ELS ). TARGET was developed by the European Central Banks primarily to implement the monetary policy of the European Central Bank. It was available to all credit institutions to carry out their financial transactions in euros. The advantage of TARGET was the fast processing of the transfers, 98% of all payments were made within five minutes.

The system was closed in all participating states on TARGET holidays .

construction

TARGET itself was not an independent transfer system in the narrower sense. You couldn't send a transfer order directly to TARGET. It merely linked existing national systems. TARGET provided interlinking components and security components through which the national systems could communicate with one another. TARGET was mainly used to process individual payments between banks. However, the system was also used for urgent transfers by companies and, in rare cases, by private individuals; the banks could decide for themselves. At the end of each day, there was an end-of-day vote on the ECB . Communication between the national systems was mainly carried out via the SWIFT network.

Attendees

TARGET balances
in billions of euros
(as of December 31, 2006)
Country total
Spain 23.640
Italy 22.856
France 10.684
Netherlands 9.931
Germany 5.399
Luxembourg 5.327
Finland 1.157
total 78.994
Ireland −2.545
Portugal −6.626
Greece −8.184
Austria −21.160
Belgium −45.269
total −83.784

Participants were (as of November 2006) the EU15 countries, the ECB as well as Poland, Slovenia and Estonia. The Polish system (Sorbnet Euro) and the Estonian system were not connected directly, but via the Italian New BIREL. Slovenia had decided not to develop its own system. Around 20 Slovenian banks and the Slovenian central bank were directly connected to the German RTGSplus and used it to process their payment transactions in euros. In total, about 40,000 credit institutions across Europe could be reached directly or indirectly via the TARGET system and the connected national systems.

A transfer via TARGET cost the affiliated bank around 1 euro. An average of 300,000 settlements per day with a total volume of approx. 2 trillion euros were carried out via the TARGET system.

history

The payment transaction experts from all EU central banks and the European Monetary Institute (EMI) have been working on TARGET since 1995. A test and simulation phase of 18 months was initiated in June 1997 and TARGET was fully operational on the first business day of stage 3 of the economic and monetary union, ie on January 4, 1999.

TARGET holidays

In addition to Saturdays and Sundays, the TARGET system was closed on European public holidays in all participating countries:

TARGET balances and their interpretation

In the course of the European financial and debt crisis, beginning in 2007, both positive and negative balances of TARGET participants rose sharply. An explanation of how TARGET balances are created and how they can be interpreted can be found under the entry for TARGET2 .

See also

Web links

Individual evidence

  1. ^ Institute for Empirical Economic Research at the University of Osnabrück: TARGET2 balances in the Eurosystem
  2. ↑ http://www.ecb.int/press/pr/date/2000/html/pr001214_4.en.html