What is T2?

T2 is the real-time gross settlement (RTGS) system owned and operated by the Eurosystem. Launched in March 2023, T2 replaced TARGET2 as the Eurozone's critical payment infrastructure, settling payments in central bank money with immediate finality.

The system processes payments related to the European Central Bank's monetary policy operations, bank-to-bank transfers, and commercial transactions. Around 1,000 banks use T2 to initiate transactions, with approximately 40,000 banks worldwide reachable through the system when including branches and subsidiaries. Every six days, T2 processes euro payments with a value close to the entire euro area GDP, making it one of the largest payment systems globally.

T2 uses ISO 20022 messaging standards and offers multi-currency capabilities, settling payments in euro and, as of April 2025, in Danish kroner.

How does T2 work?

T2 comprises two integrated components that work together to optimize liquidity management across the Eurosystem's financial market infrastructure.

• Central Liquidity Management (CLM): Participants hold Main Cash Accounts (MCAs) for central bank operations including minimum reserves, monetary policy operations, and credit lines. The CLM allows centralized liquidity steering across all TARGET Services
• RTGS settlement: High-value payments and ancillary system settlements are processed via dedicated cash accounts (DCAs) belonging to the RTGS service, where payments settle individually in real-time with immediate finality
• No value limits: The system accepts payment orders of any size, from small commercial transfers to multi-billion euro interbank settlements
• Extended operating hours: Settlement windows begin at 02:30 CET for customer and interbank payments, compared to 07:00 CET under TARGET2, supporting cross-border payments and reducing payment concentration

The four central banks that developed and operate T2 as service providers are Banca d'Italia, Banco de España, Banque de France, and Deutsche Bundesbank.

T2 transaction volume and performance

In 2024, T2 settled €1.8 trillion daily on average across 108 million annual transactions. The equivalent of the euro area's annual GDP settles in approximately eight days of operations, reflecting the system's efficiency through intraday finality that allows the same euro to be reused multiple times by different participants.

The system maintained 100% availability in 2023, with 90% of transactions settling within 38 seconds and only 0.09% taking more than five minutes. Peak daily turnover reached €2.7 trillion, while the lowest recorded was €1.3 trillion.

What is T2 used for?

T2 supports three primary functions across European financial markets: monetary policy implementation, interbank and commercial payment settlement, and ancillary system settlement.

Monetary policy operations

Central banks use T2 for mandatory settlement of all euro operations involving the Eurosystem, including refinancing operations and other monetary policy transactions. The CLM component manages minimum reserves and provides credit facilities to support policy implementation.

Interbank and commercial payments

Banks rely on T2 for high-value interbank transfers, corporate treasury operations, and time-sensitive commercial payments. The real-time processing eliminates settlement risk between financial institutions, with each payment settling individually in central bank money.

Ancillary system settlement

T2 serves as the settlement layer for large-value payment systems and securities settlement systems handling euro transactions. The system integrates with TARGET2-Securities (T2S) for securities settlement and TARGET Instant Payment Settlement (TIPS) for instant payments, enabling optimized liquidity management across all TARGET Services.

Key improvements over TARGET2

T2 introduced several modernizations addressing limitations in the predecessor system:

• ISO 20022 standard: Modern messaging format provides richer data and better interoperability compared to TARGET2's legacy formats
• Multi-currency capability: The system can settle payments in multiple currencies, first activated with Danish krone settlement in April 2025. Sveriges Riksbank and Norges Bank have expressed interest in joining
• Consolidated liquidity management: Single CLM component manages liquidity across T2, T2S, and TIPS, optimizing capital efficiency for participants
• Enhanced cyber resilience: Improved security features and multi-vendor connectivity reduce single points of failure
• Extended settlement windows: Earlier start times for customer and interbank payments reduce concentration risk and support global payment flows

The migration occurred between March 17-20, 2023, without operational disruptions, maintaining continuity for the 956 direct participants and thousands of indirect participants.

Advanced liquidity management features

T2 offers sophisticated tools to minimize the capital participants need for settlement obligations:

• Payment priorities allow urgent transactions to settle first while routine payments queue
• Liquidity reservation facilities dedicate specific amounts for particular purposes or counterparties
• Liquidity pooling enables groups of institutions to share liquidity across accounts
• Optimization procedures automatically match offsetting payments to reduce gross settlement values
• Sender limits prevent unilateral liquidity outflows by capping payments sent before receiving incoming funds

These features share functionality across TARGET Services, allowing participants to optimize liquidity holistically rather than managing separate pools for each system.

T2 and cross-border payments

T2 specifically addresses cross-border euro payment challenges within the European Economic Area. Approximately 52-61% of T2 traffic occurs between institutions in different member states, with uniform pricing for domestic and cross-border transfers creating a level playing field.

The system's real-time settlement with immediate finality means a payment from a German bank to a Spanish beneficiary settles with the same speed and certainty as a domestic German transfer. Extended operating hours beginning at 02:30 CET support global payment flows by overlapping with Asian business hours.

However, T2 only handles euro-denominated payments and, currently, Danish kroner. Transactions involving currency conversion or payments to accounts outside participating countries require correspondent banking networks or specialized payment rails like SWIFT.

‍Due's payment infrastructure extends beyond single-currency RTGS systems by enabling instant settlement across 80+ countries using both traditional rails like SEPA and stablecoin networks, providing businesses with optionality between regulated banking infrastructure and blockchain-based settlement depending on corridor requirements and speed needs.