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Real-time gross settlement (RTGS) systems are specialist funds transfer systems where the transfer of money or securities [1] takes place from one bank to any other bank on a "real-time" and on a "gross" basis to avoid settlement risk.
TARGET2 (Trans-European Automated Real-time Gross Settlement Express Transfer System) was the real-time gross settlement (RTGS) system for the Eurozone from its introduction in 2007-2008 until its replacement with T2 in March 2023. It was developed and owned by the Eurosystem.
In 1993, as the Maastricht Treaty entered into force, central banks of the EU agreed that all of them should have an real-time gross settlement (RTGS) system, as some had already done in the previous decade. In 1995, they decided to interlink these national infrastructures through a pan-European system that they called TARGET.
Early attempts at electronic fund transfers still relied on net settlement systems: Banks aggregated their balances with one another before settling up at the end of each business day. If, for ...
T2 is a financial market infrastructure that provides real-time gross settlement (RTGS) of payments, mostly in euros. It is operated by the European Central Bank and is the critical payments infrastructure of the euro area. With turnover in the trillions of euros every day, it is one of the largest payment systems in the world. [1]
Logo of the Fedwire fund transfer system. Fedwire (formerly known as the Federal Reserve Wire Network) is a real-time gross settlement funds transfer system operated by the United States Federal Reserve Banks that allows financial institutions to electronically transfer funds between its more than 9,289 participants (as of March 19, 2009). [1]
Real-time gross settlement is a funds transfer mechanism where transfer of money takes place from one bank to another on a 'real time' and on 'gross' basis. This is the fastest possible money transfer system through the banking channel. Settlement in 'real time' means payment transaction is not subjected to any waiting period.
For payments that are less time-sensitive in nature, banks typically prefer to use CHIPS instead of Fedwire, as CHIPS is less expensive (both by charges and by funds required). One of the reasons is that Fedwire is a real-time gross settlement system, while CHIPS uses a system of multilateral netting that provides management of settlement risk ...