TARGET2: Its key features and opportunities for banks

Abstract

On 19th November, 2007, the Eurosystem successfully launched the TARGET2-project for the first group of eight countries of the Eurozone. The migration to the new single platform of the banks of 21 countries will be finalised on 19th May, 2008. TARGET2 is a major achievement in the context of the integration of European financial markets' infrastructure. TARGET2 is more than a new technical system: it will bring substantial benefits to the market, such as the harmonisation of interfaces and of rules and procedures, additional tools for liquidity management and broad access possibilities to the system. It offers the possibility of important costs savings within both the banks and the Eurosystem. Moreover, TARGET2 can act as a catalyst for further consolidation of the financial infrastructure. In this context, the Eurosystem started to explore with the market the possibility of building a single European platform for 'delivery-versus-payment' of securities in central bank money. This project, called TARGET2-Securities, will deliver a major contribution to enhance the efficiency of the settlement of securities. Moreover, the Eurosystem announced to the market its plan to develop a European platform for collateral management, called CCBM2. This project will substantially increase the efficiency of collateral management of the Eurosystem and its counterparts. These three projects, TARGET2, TARGET2-Securities and CCBM2, will have a major impact on the further integration of financial markets in Europe.