TARGET2: real-time gross settlement system

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Gross settlement systems are among the most important payment systems as they handle large-value interbank payments. The significant sums involved make these payments critical for financial intermediaries and they must therefore be dealt with efficiency and security so as to guarantee that liquidity circulates smoothly within financial systems.

With the adoption of the single currency came the need for a payment system able to distribute liquidity efficiently in all Eurosystem countries: this gave rise to the creation of the TARGET system in 1999 (Trans-European Automated Real-time Gross settlement Express Transfer system). TARGET was set up so that the single monetary policy could be launched, and was based on the principle of 'minimal harmonization' of national systems. During its first four years of operation, TARGET met the objectives for which it had been created; however, the need to ensure the complete harmonization of services and their costs, together with the need for greater flexibility to cope with the expansion of the European Union and the Eurozone, led to the development of a single system, TARGET2. Operational since 2007, TARGET2 is based on a Single Shared Platform (SSP) created by the central banks of France, Germany and Italy, which settles payment orders from European banks and financial intermediaries.

TARGET2 is therefore a necessary precondition for the single currency to function smoothly and one of the pillars supporting the ongoing financial integration of the euro area.

The service levels expected by users and provided for by contract are very high: 95 per cent of transactions must be processed in less than five minutes. In 2017, TARGET2 settled all payments within five minutes, confirming its track record of excellence.

From a legal point of view, the TARGET2 system is divided into distinct national components; each national central bank operates according to the principle of 'decentralization' and has administrative and working relationships with participants in the platform operating in their country. Around 200 banks and ancillary systems participate directly or indirectly in the Italian component ('TARGET2-Banca d'Italia'); the operational and contractual relationships with these intermediaries are managed by a dedicated Banca d'Italia team.

TARGET2 is now the main European platform for real-time settlement of large-value payments in the Eurosystem and has three main objectives:

  • to provide a safe and reliable mechanism for real-time gross settlement (RTGS) of transactions in euro;
  • to increase the efficiency of payments denominated in euro;
  • to enable the transmission of monetary policy impulses throughout the euro area.

TARGET2 settles payments on accounts opened by participating banks at their respective national central banks: the presence of central bank money therefore makes the system safer compared with using commercial bank money, which is subject to the risk of default by the bank where the settlement account is held. This characteristic enhances the robustness of the platform to financial crises, thereby helping to mitigate systemic risk.

TARGET2 is used to settle payments relating to monetary policy operations, interbank payments, operations on behalf of customers of participating banks and ancillary system transactions (i.e. customer payment systems, securities settlement systems, central counterparties and money markets).

Direct access to TARGET2 is guaranteed to all intermediaries that comply with the access criteria specified in the TARGET2 Guideline, based on technical procedures that can vary, leaving participants free to choose the one most suited to their operations. TARGET2 can also be accessed indirectly by means of bilateral contractual agreements with one of the direct participants.

The system uses a Single Shared Platform (SSP) developed by Banca d’Italia together with Deutsche Bundesbank and Banque de France (3CBs) and guarantees the availability of payment services in euro in a geographical territory that is bigger than the euro area itself. The expected service levels and the legal relationships between the Eurosystem and the 3CBs, given their role as platform service providers, are regulated by contract. Banca d'Italia deals with the operational management of the platform together with Deutsche Bundesbank and with the provision of support and assistance to the national financial community.

In its role as service provider, Banca d’Italia is - together with the Bundesbank - the first point of contact for all participating national central banks (NCBs); it intervenes in the event of a malfunction, monitors compliance with the expected service levels and helps to maintain and develop the system as well as to manage the administrative, legal and security aspects. It also runs both the IT infrastructures that make the system function and those necessary to upgrade it.

In its role as support and assistance provider for the national financial community, it is the only contact at technical and administrative level for Italian financial intermediaries, it monitors the settlement of payments, especially large-value ones or those connected with ancillary systems, and it intervenes in the event of malfunctions affecting the system or individual participants.

As regards the amounts processed, TARGET2 is one of the biggest payment systems in the world.

To date, 25 EU central banks - with their respective user communities - participate in or are directly linked to TARGET2: 20 euro-area central banks (including the European Central Bank), as well as the central banks of Bulgaria, Croatia, Denmark, Poland and Rumania.

Numbers for TARGET2(1)

  • 1,073 direct and 684 indirect participants
  • 350,000 payments settled on average every day, with an overall daily average of €1,697 billion - the average amount settled is around €4.8 million
  • 90 per cent of the overall value of large payments are settled in euros
  • Customer payments account for 57 per cent of total payments
  • Almost 70 per cent of all payments have a value of less than €50,000
  • Technical availability of the platform: 100 per cent, with 99.8 per cent of transactions processed in less than five minutes

Numbers for Italy’s TARGET2 component

  • 89 direct and 42 indirect participants
  • 34,000 payments settled on average every day, for a daily average of €68 billion - the average amount settled is around €2 million
  • Italy's share of total TARGET2 payments is 10 per cent in terms of the number of transactions and 4 per cent in terms of value, in line with the previous year's percentages

Another key aspect is how to connect to the system through which participants interact with the platform to send payment messages, system queries, and receipt of notifications and reports. Banks can connect with TARGET2 using SWIFT, which is the most widespread network for financial services in the world.

The platform undergoes a yearly release, designed to upgrade the services provided and to introduce new technical and business functions, also with regard to the launch of new projects. The last update, Release 12.0 (scheduled for November 2018), introduced the functionalities needed to adapt the system to the new TIPS service (TARGET Instant Payment Settlement), in order to guarantee smooth liquidity transfers between TARGET2 participant accounts and TIPS accounts.

(1)Updated to 2017 (TARGET2 Annual Report).


Markets and Payment Systems Directorate General
Payment Systems Directorate
Large-value Payment Systems Division
Via Pastrengo, 14 - 00185 Rome

Tel: +39 06 4792 5700

Markets and Payments Systems Directorate General
Payment Systems Directorate
Eurosystem Market Infrastructures Division
Largo Guido Carli, 1 - 00044 Frascati

Tel: +39 06 4792 6000


The Guide for Participants of TARGET2-Banca d'Italia outlines the regulatory and functional features of the TARGET2-Banca d’Italia system and of the Home Accounting Module (HAM) of the TARGET2 Single Shared Platform (SSP).


T2 Forms

Forms for direct and indirect participants and ancillary systems to register with the TARGET2-Banca d’Italia system, and for HAM account holders and CB customers to register with the HAM; the "Reference and static data registration user guide" to fill in the forms is available in the dedicated section.

T2S Forms

Forms for registering with the TARGET2 system - Securities of cash account holders directly or indirectly connected to the System; the "Reference and static data registration user guide" to fill in the forms is available in the dedicated section.

TIPS Forms

Forms for TIPS DCA holders to register with TIPS; the "Reference and static data registration user guide" to fill in the forms is available in the dedicated section.

Contingency modules

Modules to be sent to Banca d’Italia in the event of contingency operations.