TARGET2 is an interbank payment system for the real-time processing of cross-border transfers throughout the European Union. TARGET2 replaced TARGET (Trans-European Automated Real-time Gross Settlement Express Transfer System) in November 2007.TARGET2 is the real-time gross settlement (RTGS) system owned and operated by the Eurosystem. TARGET2 is the second generation of TARGET. Payment transactions are settled one by one on a continuous basis in central bank money with immediate finality. There is no upper or lower limit on the value of payments. TARGET2 mainly settles operations of monetary policy and money market operations. TARGET2 has to be used for all payments involving the Eurosystem, as well as for the settlement of operations of all large-value net settlement systems and securities settlement systems handling the euro. TARGET2 is operated on a single technical platform. The business relationships are established between the TARGET2 users and their National Central Bank. In terms of the value processed, TARGET2 is one of the largest payment systems in the world (See TARGET Annual Report 2012).A Dutch importer, for example, might place an order with a Spanish company. Payments to and from the accounts of the buyer and seller are channeled via central banks, so the Spanish exporter's bank gets a credit with the Banco de España, which in turn has a claim on the ECB. The Dutch importer's bank owes its local central bank, leaving De Nederlandsche Bank with a debit at the ECB.Why payment systems at central banks? As issuers of money, central banks have always had a keen interest in the smooth functioning of the national payment system and the way it affects the economy. Central banks have taken on a prominent role in the pursuit of maintaining trust in the currency and ensuring its smooth circulation. There is a strong motivation for central bank involvement in payment, clearing and settlement issues. Modern economies are dependent on the safe and efficient flow of transactions. The smooth functioning of payment, clearing and settlement systems increases users’ confidence in those systems and, ultimately, public confidence in the currency. The functioning of these systems also has an impact on the stability of financial institutions and markets, and may affect systemic stability. Such systems are also essential for the implementation of monetary policy. Payment, clearing and settlement systems are important for financial markets and the functioning of the economy as a whole, and are therefore important for the welfare of society. Central banks can also have an operational role in the processing of retail payments. In some countries, the central bank also operates securities settlement infrastructure. Acting in an operational capacity is one way for the central bank to ensure that the system or service in question meets the safety and efficiency standards it has set. A central bank will usually co-operate closely with the banking system when developing the facilities it operates. TARGET was developed by the Eurosystem, the central banking system of the euro area. It offers a premium payment service across national borders in the European Union (EU).Main objectives of TARGET2: Supporting the implementation of the Eurosystem's monetary policy and the functioning of the euro money market; Minimising systemic risk in the payments market; Increasing the efficiency of cross-border payments in euro. By meeting these objectives, TARGET contributes to the integration and stability of the euro area money market.