TARGET maintains its leading position in Europe, processing 90% of the total value settled by large-value payment systems in euro, and in the world as one of the biggest payment systems.
TARGET processes the bilateral settlement of payment orders submitted by direct participants, as well as orders from ancillary systems (AS) resulting from the clearing and net settlement process. In the case of direct participants, the originator (payer) is either a CI customer (customer payment) or the CI itself (interbank payment), whereas in the case of ancillary systems, the AS transmits a net settlement file to be processed in TARGET according to a specific settlement model. Furthermore, TARGET is used for the settlement of national central bank (NCBs) payments connected to key functions in the context of the Eurosystem, such as payments related to the monetary policy operations. TARGET is based on a Single Shared Platform (SSP) for payments managed by the Eurosystem according to a decentralized design, i.e. each NCB is responsible for the management of the respective national TARGET component system. Thus, TARGET-GR is the Greek component of TARGET operated by the Bank of Greece and is comprised by the Bank of Greece, Credit Institutions (CI) and Ancillary Systems (AS) operating in Greece.
Open market operations
Open market operations are conducted on the initiative of the ECB, which determines the instruments to be used and the terms and conditions for their execution (see Open Market Operations). Main refinancing operations, conducted on a weekly basis and normally with a maturity of one week, are the most common instrument. Main refinancing operations provide liquidity to CIs and are executed by Bank of Greece in the form of reverse transactions. The settlement of the cash leg of such transactions is carried out against collateral put forward by the CI for this purpose. Upon maturity, principal and accrued interest are repaid to Bank of Greece, which simultaneously releases the collateral.
In the context of the monetary policy conducted by the Eurosystem, Bank of Greece offers to domestic CIs the deposit and marginal lending facilities. Under the deposit facility, a CI may deposit overnight part of its liquidity in an account held with the BoG and the related one-day interest is calculated. Under the marginal lending facility, CIs may receive overnight credit from Bank of Greece against eligible assets, in the event that the balance on their RTGS accounts is expected to be negative at the system’s closing time (marginal lending on request). If a requirement for the participant’s request has not been met, automatic marginal lending is provided, whereby intraday credit is transformed into overnight credit at the end of the day.
TARGET-GR participants may access markets across the Eurosystem and mainly the euro area money market. In this context, payments between CIs, as well as all payments between CIs which are carried out for their own account (as opposed to payments on behalf of their customers) are defined as interbank payments. Interbank payments between CIs belonging to the same parent entity are identified as intra-group liquidity transfers.
Ancillary systems settlements
Retail payment systems
Retail payment systems use the TARGET-GR system for the settlement of their final positions.
On a daily basis, nine settlement cycles take place in TARGET-GR for both domestic and cross-border payments of the interbank system of DIAS S.A. For cross-border payments DIAS S.A. co-operates with EQUENS (a clearing house based in the Netherlands), while it also provides a technical facility to CIs that are participants in the STEP2 platform operated by EBA Clearing (a pan-European clearing house).
The ACO clears bank drafts and private cheques denominated in euro or foreign currency, drawn on banks operating in Greece (see Athens Clearing Office). With respect to euro-denominated cheques, TARGET-GR provides same-day settlement of the net positions resulting from ACO clearing.
Securities settlement systems
Through BOGS, book-entry securities of the Greek government and other agencies are issued, registered and monitored. Also, the system provides clearing and settlement services for transactions in book-entry securities held in participants’ accounts. Bank of Greece, as Manager of the System, has participated in TARGET2-Securities (T2S), the single pan-European technical platform for securities settlement, since 22 June 2015, while the cash leg of securities transactions is settled in central bank money through Dedicated Cash Accounts (DCAs) in TARGET.
Hellenic Exchanges S.A. (HELEX) operates the securities depository and settlement system for all transactions on the Athens Exchange. The Central Securities Depository (CSD) is a member of TARGET-GR as an ancillary system. It also provides securities settlement services, the cash leg of which is settled to TARGET-GR.
Retail payments in TARGET-GR
In addition to the settlement of retail payment system net positions, TARGET-GR also settles customer payments, i.e. retail payments of typically low value initiated by CI customers and executed, on their behalf, by CIs.
The choice of using TARGET-GR rather than a retail payment system for customer payments is mainly associated with the time aspect of the payment, given that TARGET-GR provides real-time final settlement during its operating hours.
Cross-border customer payments
Cross-border customer payments refer to customer payments between direct participants of different national components of TARGET. Such payments generate claims and corresponding liabilities (bilateral balances) for the respective NCBs TARGET account balance. Moreover, TARGET is used as a channel for payments to and from CIs established outside the EU through their TARGET2 correspondents. The largest share of CIs acting as TARGET correspondents are accounted for by the TARGET components of Germany, Spain, France, the Netherlands and Belgium (ECB data). Thus, an estimated number of more than 55,000 CIs worldwide can initiate and receive payments, making TARGET a global hub for processing payments in euro. A geographical breakdown analysis of TARGET payments by originator (payer) and recipient (payee) allows for a mapping of payments of euro payments in a world scale.
The Eurosystem is currently developing a new service for instant payments, TARGET Instant Payment Settlement (TIPS), which commenced operations in November 2018. The new service will be available 24/7/365 at pan-European level and will co-exist with other instant payment solutions available in the market.
TARGET enables end users to benefit from its state-of-the-art technological functionalities, with the most important advantage being the Central Liquidity Management (CLM) feature, allowing for a clear allocation of liquidity for the different settlement purposes (Τ2, Τ2S, TIPS).