16 Bulgarian Banks and savings banks, and the Bulgarian National Bank have joined the new TARGET2 payment system on 01. February 2010
The TARGET2 payment system is a centralized EU-wide real-time gross settlement (RTGS) system, which will gradually replace the old TARGET system, which was established when the euro was introduced in 1999. Like the older TARGET system, the purpose of TARGET2, is to facilitate real-time settlement of large-value payments and urgent payments, while inter-bank settlement is carried over on the accounts of banks held with the central bank.
Unlike the old system, which depended on a network of interconnected national RTGS systems, TARGET2 is a centralized technical solution. The single technical infrastructure, the Single Shared Platform (SSP) of the new system is operated by the national central banks of Germany, Italy and France on behalf of the Euro-system. Within the hierarchical governance of the TARGET2 system, the highest level is held by the Governing Council of the ECB, while the subsidiary level of competence is held by national central banks belonging to the Euro-system. Due to the fact that the technically single system is legally structured as a set of payment systems, components of the TARGET2 system, these central banks manage these components and maintain relations with banks which have opened settlement accounts with them.
The following Bulgarian banks together with the Bulgarian National Bank are from 01. February 2010 part of the TARGET2 system:
- UnicreditBulbank www.unicreditbulbank.bg
- DSK Bank www.dskbank.bg
- Raiffeisenbank www.rbb.bg
- Pireos bank www.piraeusbank.bg
- MKB Unionbank www.unionbank.bg
- First Investment Bank www.fibank.bg
- Bulgarian American Credit Bank www.bacb.bg
- D-bank www.dbank.bg
- Corporate Commercial bank www.corpbank.bg
- Investbank www.ibank.bg
- Central Cooperative Bank www.ccbank.bg
- Municipal Bank www.municipalbank.bg
- Bulgarian Development bank www.nasbank.bg
- International Asset Bank www.iabank.bg
- Teximbank www.teximbank.bg
- T.C. Ziraat Bankasi A.S – Sofia Branch
- Payment system BISERA7-EUR, run by Bankservice www.bsbg.net
Advantages of the TARGET2 system
- Harmonization (more harmonized, transparent operational procedures)
- Faster transfers (no conversions and delays)
- Cheaper costs (one platform, instead of multi-RTGS’s)
- International Competitiveness
- Simplification of the non-cash payment structure
- Replacement of the domestic and the cross-border payments with a single solution
- Consistent Levels of Service
- Single Price Structure (same platform, no difference between domestic and cross-border)
- Standardization and Consolidation (settlement of all participants from a single RTGS account)
- More reliability?
Payment orders will be sent directly to the TARGET2 participants (instead of being processed via the decentralized RTGS’s) and the bookings will be handled centrally by TARGET2.
Payment processing with TARGET2:
- The credit institution (your local bank) receives the payment order from the client
- The payment order is sent directly to TARGET2 through SWIFT
- During transfer, the bookings are settled
- The payment order is received by the credit institution
The establishment of the new system is a step towards integration, harmonization and rationalization of European payment and settlement systems; it is particularly significant for banks, as it brings a standardization of procedures and the possibility of better liquidity management. The migration to the TARGET2 system brings no changes for customers, as they will still be able to take advantage of real-time (immediate) settlement of domestic and cross border urgent payments and payments of large amounts denominated in euros.