The euro payment system TARGET (Trans-European Automated Real-time Gross settlement Express Transfer System) is a real time payment system used by the national central banks of the Member States of the European Union (EU), participants in the Economic and Monetary Union, together with the European Central Bank (referred to as the Eurosystem) to implement the single monetary policy and promote smooth operation of the euro payment system. EU banks use this system for financial market settlements as well as large value and urgent customer payments.
On 24 October 2002, the Governing Council of the ECB passed a strategic decision to transform TARGET, replacing it with a technologically new system - TARGET2 - which would considerably increase payment efficiency in Europe and provide an opportunity for further integration of the European financial infrastructures. The main advantage of the new system is the single shared technical platform developed to ensure equal conditions in all countries who have joined TARGET2 and a possibility to connect new participating countries to it (for further information please refer to Averss un Reverss, No 4/2006, and the ECB website). The new system will be one of the most advanced and efficient payment systems in the world.
Legally and operationally the decentralisation principle is retained with respect to each Member State joining the TARGET2 system. TARGET2-Latvija started its operation on 19 November 2007, and the Latvian commercial banks, the Bank of Latvia and the Treasury have joined it as the direct participants. DENOS, the securities settlement system of the Latvian Central Depository, will also use TARGET2 for its settlements. TARGET2-Latvija provides its participants with an efficient, fast and reliable infrastructure for payments in euro, using the deposits with the Bank of Latvia for settlement.
The new payment system provides an alternative for the practice to use correspondent banking services for payments in euro. Since TARGET2-Latvija ensures interbank settlement also for domestic payments in euro, EKS, the electronic clearing system of the Bank of Latvia, will start processing retail euro payments in 2008. That will enable to settle customer payments in euro among Latvian banks within one day, similarly to the current processing of lats payments.
Legal documents on TARGET2-Latvija (available only in Latvian)
Information guide for TARGET2 users (describes overall functioning of the TARGET2 and business continuity procedures)
Press releases of the European Central Bank:
TARGET2 successfully launched
19 November 2007
Second migration group connects to TARGET2
18 February 2008
Final migration group connects to TARGET2
19 May 2008
Press release of the Bank of Latvia:
Launch of the new payment system TARGET2-Latvija
20 November 2007