TARGET Services are developed and operated by the Eurosystem which ensure the free flow of cash, securities and collateral across Europe.
TARGET2-CY is the Cyprus component of TARGET2, which is the Eurosystem’s Trans-European Automated Real-time Gross settlement Express Transfer and Settlement System for transactions in euro. TARGET2 went live in November 2007 to replace TARGET, being the Eurosystem’s first generation large-value payment system.
TARGET2 operates on a Singe Shared Platform, which includes payment and accounting processing services and customer-related services. The technical and functional specifications of TARGET2 are determined by the Eurosystem. From a legal point of view, TARGET2-CY is a separate system, but it nevertheless operates within a harmonised legal, structural and pricing framework.
Central banks and commercial banks submit payment orders in euro to TARGET2. Being a real-time gross settlement system (RTGS), such orders are processed and settled on a transaction-by-transaction basis in real time and without netting. Transactions are settled in central bank money and, once processed, are irrevocable and unconditional to guarantee settlement finality throughout the day.
The CBC is a participant as well as the operator of TARGET2-CY, in line with the responsibilities set out in Guideline ECB/2012/27 and the TARGET2-CY CBC Directive (Κ.Δ.Π. 372/2017), as amended (2018, 2019, 2021) (only available in Greek). The CBC acts as a service provider and is responsible, amongst others, for the assessment, approval, suspension or termination of participation in the system.
Other financial market infrastructures also settle their cash positions in TARGET2-CY (i.e. the Central Depository Central Registry (CDCR) of the Cyprus Stock Exchange, the Cyprus SEPA Direct Debit Payment System (CY-SDD) and the Cyprus Clearing House for cheques (CCH)).
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TARGET Instant Payment Settlement: TIPS-CY
The ECB has developed an innovative pan-European instant payment service for settlement in less than 10 seconds, in central bank money. The TIPS service was launched on 30 November 2018 and the CBC, in its capacity as the operator of TARGET2-CY, stands ready to provide support to local authorised credit institutions and other potential participants, for their participation in TIPS.
Policy on the use of prefunding by ancillary systems
With regard to ancillary systems' access to TARGET2 as outlined in the TARGET2 Guideline Annexes II and IV, the Eurosystem has put in place a policy on the use of prefunding by ancillary systems, specifying eligible transaction types and applicable conditions.
Access to TARGET2 by ancillary systems (and hence the use of prefunding) is expressly not permitted for use cases such as the issuance of stablecoins to the public.