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Euro settlement systems


Euro is the common currency of the European Union which replaced the national currencies of 11 member states in 1999; the new currency issued in cash form has been applied in 12 member states since 2002 and in 13 member states as from 2007. Since the settlement infrastructure was developed by connecting the national systems, it is important that, in addition to them, pan-European systems be established.

The most important pan-European systems:

TARGET (and TARGET2): The TARGET is the real-time gross settlement system of the euro area, the second largest system of the world after the CLS performing the settlement of FX transactions. The TARGET is a complex, decentralized payment system developed by connecting the national systems. In November 2007 the Eurosystem launched successfully the single shared technical platform of TARGET2. The TARGET2 is operating on a single platform, better harmonized than the former system but it is still decentralized legally, i.e. the combination of national systems.

The Euro Banking Association (EBA) operates several settlement systems. The Euro1 system is a system aimed at implementation of payment transactions between large European banks but it is a net settlement system. The STEP1 is a low value net settlement system for a wider range of banks.

The STEP2 was established for efficient and cheap clearing of low-value payment transactions. Dominant majority of the Hungarian banks has indirect participation in STEP2. The MNB has direct participation in the STEP2 system; it grants an indirect access to Hungarian credit institutions with technical co-operation by the GIRO Ltd. and provides entry point service of all Hungarian bank accounts.

Considerable mergers are underway among the European clearing houses which may lead to establishment of new pan-European systems. The European Automated Clearing House Association (EACHA) – the GIRO Ltd. is among its members – wants to provide the pan-European coverage by the way of the connection of the existing systems.