Payment systems operations

Every day, millions of financial transactions are settled promptly thanks to the proper functioning of the payment system, which is a set of instruments, market players, procedures and regulations that enable the transfer of money from one entity to another.

For banks, businesses, public administrations, and citizens, the transfer of money is a frequent yet sensitive process. Each payment must be executed promptly, with high security standards and at low cost, to ensure that the economic system operates efficiently and reliably.

Among the core functions assigned to the European System of Central Banks (ESCB), composed of the national central banks and the European Central Bank (ECB), is to promote the smooth functioning of payment systems, as stipulated in Article 127(2) of the Treaty on the Functioning of the European Union (formerly Article 105) and in Articles 3 and 22 of the Protocol on the Statute of the ESCB and the ECB. In Italy, the Consolidated Law on Banking and Credit (Article 146 of Legislative Decree No. 385 of 1 September 1993) grants the Banca d'Italia specific responsibilities in the area of payment systems.

The Eurosystem, consisting of the ECB and the national central banks of the countries that have adopted the euro, fosters efficiency, stability, and security in the payment system through the direct provision of payment services, cooperation among market participants, and the exercise of oversight, regulatory, and supervisory activities inherent to the function of oversight of payment systems.

Direct Provision of Payment Services

To ensure monetary and financial stability, the Eurosystem needs secure and efficient payment and settlement infrastructures. As a national central bank within the Eurosystem, the Banca d'Italia contributes to achieving these objectives by defining strategic guidelines for the euro payment system and allocating significant human and technological resources to the development and management of the related infrastructures.

The name 'TARGET Services' refers to the infrastructures owned by the Eurosystem that enable the transfer of central bank money [1] and securities across Europe. These infrastructures include:

  • T2, for the settlement of wholesale payments [2];
  • TARGET2-Securities (T2S), for the settlement of securities transactions;
  • TIPS, for the settlement of instant payments;
  • ECMS, for the unified management of collateral for Eurosystem credit operations."

The T2 service consists of two components: Central Liquidity Management (CLM) and Real-Time Gross Settlement (RTGS). The former is dedicated to the settlement of central bank monetary policy operations and to liquidity management and monitoring; the latter enables real-time gross settlement [3] of interbank payments.

Since 20 March 2023, T2 has replaced the previous TARGET2 system—operational since 2007—while integrating new functionalities. Developed under the Eurosystem's mandate by the Banca d'Italia and the Deutsche Bundesbank as part of the T2‑T2S Consolidation project [4], T2 contributes to reducing systemic risk in the euro area through settlement in central bank money. Furthermore, the ability to transfer funds in real time supports the uniformity of interest rates in the interbank market and ensures a consistent transmission of monetary policy across the euro area.
As of April 2025, T2 also settles transactions in Danish kroner, fully assuming the characteristics of a multi-currency system.

Together with the central banks of France, Germany, and Spain (4CB), the Banca d'Italia also developed T2S, the pan-European, multi-currency platform for the settlement of securities transactions, in operation since 2015. T2S has eliminated the technical and operational barriers that previously hindered cross-border settlement in the European financial market, originally identified by the Giovannini Group set up within the European Commission.

TIPS (TARGET Instant Payment Settlement) is the multi-currency pan-European platform, operating continuously 24 hours a day, 365 days a year, for the real-time settlement of instant payments [5] in central bank money. Transactions processed through TIPS have no amount limits and entail low costs for participating institutions. In 2017, the ECB Governing Council entrusted its development and management to the Banca d'Italia; the platform has been operational since November 2018. Through TIPS, the Banca d'Italia has expanded its role in market infrastructures, offering services that go beyond the interbank sector to include citizens and businesses, by enabling the settlement of retail payments.

Since April 2025, TIPS has been able to settle instant payments denominated in euro, Danish kroner, and Swedish kronor."

ECMS (Eurosystem Collateral Management System) is the Eurosystem's unified platform for managing assets pledged as collateral in credit operations. Operational since June 2025, it has replaced the previous national systems by harmonizing rules and procedures for the mobilization and administration of collateral.

At the national level, Banca d'Italia operates the BI-Comp system, where multilateral payments are netted (multilateral netting) and settled in T2. BI‑Comp processes retail payments [6] originating from clearing systems [7] managed by BCC Sistemi Informatici, equensWorldline, Nexi Payments, TAS, and Bancomat.

The GEPA platform, developed by Banca d'Italia, manages payment and collection transactions initiated by Banca d'Italia both on its own behalf and on behalf of the Public Administration (such as salaries and pensions).

In addition to payment services, Banca d'Italia issues substitute declarations in lieu of cheque protest, which are official attestations of non-payment of cheques. These declarations, similar to protests registered by notaries or judicial officers, enable the exercise of recourse as provided for by the so-called Legge Assegni or 'Cheque Law' (Royal Decree No. 1736/1933).

Furthermore, Banca d'Italia holds accounts for each monetary policy counterparty and/or participant in TARGET Services. These accounts record eligible financial assets owned by the counterparties (securities or bank loans), which are used as collateral for credit granted by the Eurosystem in monetary policy operations and for intraday liquidity (the so-called pooling system).

[1] 'Central bank money' indicates the funds that are held in accounts at their respective central banks by the subjects that participate in these infrastructures.

[2] 'Gross payments' refers to typically large-value payments made in interbank transactions and monetary policy operations.

[3] 'Gross settlement' refers to the settlement of each transaction one by one, without netting, in the accounts held by institutions with their respective central banks.

[4] T2-T2S Consolidation was a project presented by the Eurosystem as part of its market infrastructure evolution strategy (so-called Vision 2020) aimed at integrating the functionalities previously offered by TARGET2, T2S and TIPS into a single platform and offering advanced services to meet the needs of financial market participants.

[5] Instant payments (SEPA Instant Credit Transfer - SCT Inst) are electronic retail payments that are settled within a few seconds of being sent.

[6] These involve transactions using 'domestic' instruments, such as electronic cheques and debit cards.

[7] Clearing systems manage the exchange of payment information and calculate individual financial positions on a bilateral netting basis between participants.