Feeds

Europe's banks Target payments upgrade

Changing the way they move money around

5 things you didn’t know about cloud backup

When the Euro was created, the European banks had to create a real-time payments settlement system to handle it. Not unnaturally, this was built on top of the existing systems. Now, however, they're upgrading it to a new system that turns those decentralised systems into a single centralised one.

Leading the way is Target2, an upgrade to Target, the present real-time gross settlement system (RTGS) used by the European banks. Target2 is due for completion in November 2007. Target2, like its predecessor, is being built by the central banks of Germany, France, and Italy.

Target dates back to the 1999 creation of the Euro, when, for the first time, the European banks all shared a currency. In the interests of making the deadline, Target was designed to fit on top of all 25 national payment systems. In 2005, it handled an average of 6.3 million payments with an aggregate value of €40.7 trillion per month, about a third of those payments cross-border. So far in 2006, those numbers are up by an average of five per cent.

Target2, first proposed in 2002, is intended to improve upon Target by creating a single IT platform that will, in the long term, lower IT costs and therefore the cost to the banks of transferring payments by allowing organisations to use the same system for both cross-border and domestic payments. The new system is also intended to give faster settlement times and better real-time visibility. Banks should, for example, be able to view all incoming and outgoing payments on a screen in real-time, something that has not been possible before now. In addition, the system will enable group pricing, so a company can pool all its transactions in all countries to qualify for stepped discounts.

Target2 is also intended to enable pooled liquidity, a feature users of the present system have been asking for. Under the present system, a multinational company might have pockets of liquidity in different locations that cannot be deployed elsewhere. With Target2, these pockets can be merged.

The new system will require enhanced disaster recovery; it will have a secret second site where all transactions will be mirrored in real-time.

The schedule calls for internal testing to begin with central banks in February 2007. Testing for commercial banks and other participating systems is due to start in May 2007, with migration to follow beginning in November 2007. Migration will be in three groups of countries; the November 2007 tranche include Germany and Austria. The second group, including Belgium and France, will follow in February 2008; and the third and final group, including Italy and the European Central Bank, will finish in May 2008. ®

Wendy M Grossman can be found on the web here.

Build a business case: developing custom apps

More from The Register

next story
Microsoft: Azure isn't ready for biz-critical apps … yet
Microsoft will move its own IT to the cloud to avoid $200m server bill
Shoot-em-up: Sony Online Entertainment hit by 'large scale DDoS attack'
Games disrupted as firm struggles to control network
Silicon Valley jolted by magnitude 6.1 quake – its biggest in 25 years
Did the earth move for you at VMworld – oh, OK. It just did. A lot
VMware's high-wire balancing act: EVO might drag us ALL down
Get it right, EMC, or there'll be STORAGE CIVIL WAR. Mark my words
Forrester says it's time to give up on physical storage arrays
The physical/virtual storage tipping point may just have arrived
VMware vaporises vCHS hybrid cloud service
AnD yEt mOre cRazy cAps to dEal wIth
prev story

Whitepapers

A new approach to endpoint data protection
What is the best way to ensure comprehensive visibility, management, and control of information on both company-owned and employee-owned devices?
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Maximize storage efficiency across the enterprise
The HP StoreOnce backup solution offers highly flexible, centrally managed, and highly efficient data protection for any enterprise.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.