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TARGET2
The RTGS system for the euro
2
TARGET2
• Three years of operations• Getting ready for T2S• Strategic developments
3
TARGET2Three years of operations
100%
125%
150%
175%
200%
225%
250%
275%
300%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
100%
125%
150%
175%
200%
225%
250%
275%
300%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Volume
Value
In 2010…•€593 trillion settled (€2.3 trillion daily)
•88.6 million transactions (343,000 daily)
TARGET2 traffic taking 1999 as a reference
In 2010…•One of the biggest LVPS in the world
•90% market share in euro LVPS
Comparison with other LVPSdaily turnover in € billion equivalent
CLS
TARGET
Fedwire
Euro 1
BoJNet
CHIPS
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
CLS
TARGET
Fedwire
Euro 1
BoJNet
CHIPS
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
4
TARGET2Three years of operations
In 2010…•24 banking communities connected
•60,000 reachable institutions worldwide
70
24
52
21
961
783
0 200 400 600 800 1000 1200
RTGS accounts
Ancillarysystems
Central Banks
70
24
52
21
961
783
0 200 400 600 800 1000 1200
RTGS accounts
Ancillarysystems
Central Banks
0
20
40
60
80
100
120
140
160
180
200
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
99.0%
99.2%
99.4%
99.6%
99.8%
100%
0
20
40
60
80
100
120
140
160
180
200
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
99.0%
99.2%
99.4%
99.6%
99.8%
100%
Incidents
Availability
In 2010…•100 % technical availability•99.74% of payments settled < 5 min
May-08
Dec-10
Participation
System’s performance
5
After three years of operations…• Smooth functioning of the system• High level of customer satisfaction• Regular dialogue with the users on system’s
enhancement
… time to think about strategic developments
TARGET2Three years of operations
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TARGET2
• Three years of operations• Getting ready for T2S• Strategic developments
7
RTGSDCA
CSD1
CSD2
CSDn
CSD3
CSD1
CSD2
CSDn
sub a/c 1
RTGS
sub a/c 2
RTGS
CSD3 sub a/c 3
TARGET2Getting ready for T2S
Changes triggered by T2S (cash side)
8
Changes triggered by T2S (cash side)
TARGET2Getting ready for T2S
• Fragmentation of participants’ liquidity due to the multiplicity of sub-accounts.
• Auto-collateralisation in few CSDs and with RTGS account opened with the ‘local’ NCB.
• Multiplicity of the settlement procedures.
• Strong operational dependence between CSDs and TARGET2.
• Rationalisation of banks’ liquidity management (possibility to have one single DCA for settling in all CSDs).
• Auto-collateralisation available with all CSDs where the eligible securities are held.
• One single interface for all CSDs hosted by T2S.
• Large operational autonomy thanks to auto-collateralisation.
+
9
Banks’ challenge (cash side)
• Monitor and consolidate their cash position in real time
• Shift liquidity quickly wherever it is needed
• Use the same technical interface for managing both their DCA and their RTGS accounts
• T2S is exclusively based on ISO20022
• TARGET2 is not yet using ISO20022• Not all TARGET2 participants will be
ready to move to ISO20022 for cash management
TARGET2Getting ready for T2S
CentralBank
MoneyRTGSDCA
Banks wish to…
… while
BANK
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Alternative interface (legacy standards)
•Access to the main DCA features via TARGET2:
Intraday balance on the DCALiquidity shift (push and pull)End of day statement for the DCA
•Eased access to the T2S GUI for other features
Converted by TARGET2
Op
tion
al off
er
Legacy sta
nd
ard
sConversion by TARGET2
CentralBank
Money
TARGET2Getting ready for T2S
Eurosystem’s offer for TARGET2 (cash side)
RTGSDCA
ISO20022 compliant interface• Access to RTGS related features via
TARGET2 using a new ISO20022 compliant interface.
• Access to DCA related features via the regular T2S ISO20022 compliant interface.
Sta
nd
ard
off
er
ISO20022
11
TARGET2
• Three years of operations• Getting ready for T2S• Strategic developments
12
TARGET2Strategic developments
Migration to ISO20022• Cornerstone in the development of TARGET2• Benefits in terms of efficiency and interoperability.• Synergies with other projects in Europe and worldwide.
• Step-by-step implementation of ISO20022 in TARGET2.• Flexible coexistence of legacy and ISO20022 standards.• Discussions with users’ community.
WHY ?
HOW ?
WHEN ?
Market consultation
Dec.2010 Nov.2013
Step1Step1: adaptations to T2S
Step2Step2: customer payments
Nov.2014 Nov.2015
Step3Step3: large value & reporting
Market consultation
Dec.2010 Nov.2013
Step1Step1: adaptations to T2S
Step2Step2: customer payments
Nov.2014 Nov.2015
Step3Step3: large value & reporting
TARGET2
The RTGS system for the euro