Banks and domestic credit institutions

Banks and domestic credit institutions

Direct transfer participants are banks and domestic credit institutions. Central banks may also authorize other institutions to participate in the scheme as Member States Treasury Departments, Compensation Houses and Settlement Institutions, Financial Investment Firms, other public sector institutions that can open accounts to customers, all authorized and supervised by the central bank or other recognized authorities in the field. The admission criteria of the direct participants refer to the appropriate financial capacity of the institution, the minimum number of transactions, the necessary technical infrastructure according to the standard level and the approval of the central bank. Particularly by these domestic institutions, recharge wechat, there may also be participants from other countries (remote) who wish to participate in the gross settlement system without having a head office in that country. Host countries’ central banks have to deal with similar requests to local institutions, including access to day credits and other settlement facilities, provided that the risks to remote participants are not higher than those of local participants. Such cases are quite few.

The TARGET process only manages almost exclusively the high value payments that are transmitted between the participants, without any lower or higher limits. In conclusion, TARGET carries out the following types of operations, typically credit transfers:

– direct payments linked to the operations of the Eurosystem central banks;

– settlement of balances for large-value payment systems;

– interbank payments and commercial payments.

Retail payments that do not require too much execution speed are processed by other European fund transfer systems that also have lower costs than Euro-giro and others.

The architecture of the project includes a technical component and a conception of interconnection of central banks with the European Central Bank through a communication network called Interlinking through which payment messages are changed. At the same time, the central banks have a Standard Interlinking component that ensures the transformation of the message from the internal standard into the community.

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