GLOBAL PAYMENTS KNOWLEDGEISO 20022 / SWIFT / SEPA / MT / MX
PAYMENTSSIGNAL

The interactive academy for the standards, messages, and rails that move money.

GET IN TOUCH
FOLLOW THE PAYMENT

A TARGET2 (T2) settlement (euro RTGS)

A high-value euro payment settles one-for-one across the banks' accounts in central-bank money, in real time and with finality — each accepted instruction settles on its own, without any prior netting.

Reference card →
Your notes

Contributor Shubham Mathure

STEP 1 / 5MESSAGE

Bank Alfa submits the payment to T2

Bank Alfa (sending bank) → TARGET2 (T2) · pacs.009

Bank Alfa's payments desk sends a high-value interbank payment (a pacs.009) to TARGET2, which processes it the instant it arrives rather than batching it for a later cycle. Nothing has moved yet — it is an instruction.

Step 1 of 5: Bank Alfa submits the payment to T2

  1. 01Message
    Bank Alfa submits the payment to T2Bank Alfa (sending bank) → TARGET2 (T2) · pacs.009
  2. 02Processing
    T2 checks Bank Alfa's available liquidityTARGET2 (T2)
  3. 03Settlement
    T2 settles the payment in central-bank moneyBank Alfa (sending bank) → Nordbank (receiving bank)
  4. 04Message
    Nordbank is confirmed of the settled paymentTARGET2 (T2) → Nordbank (receiving bank)
  5. 05Posting
    Nordbank books the incoming fundsNordbank (receiving bank)
MESSAGECLEARING OBLIGATIONSETTLEMENTPOSTING
Full step-by-step text (works without JavaScript)
  1. 01Message
    Bank Alfa submits the payment to T2Bank Alfa (sending bank) → TARGET2 (T2) · pacs.009

    Bank Alfa's payments desk sends a high-value interbank payment (a pacs.009) to TARGET2, which processes it the instant it arrives rather than batching it for a later cycle. Nothing has moved yet — it is an instruction.

  2. 02Processing
    T2 checks Bank Alfa's available liquidityTARGET2 (T2)

    TARGET2 checks whether Bank Alfa's RTGS account holds enough available liquidity — drawing on the Central Liquidity Management (CLM) component — to cover the full amount before it settles anything.

  3. 03Settlement
    T2 settles the payment in central-bank moneyBank Alfa (sending bank) → Nordbank (receiving bank)

    With liquidity confirmed, T2 debits Bank Alfa's account and credits Nordbank's account at the central bank, one payment at a time. RTGS settles each accepted instruction individually, without any prior netting, and the transfer is final the instant it settles.

    • DR Bank Alfa's RTGS account at the central bank — EUR 2,000,000.00
    • CR Nordbank's RTGS account at the central bank — EUR 2,000,000.00
  4. 04Message
    Nordbank is confirmed of the settled paymentTARGET2 (T2) → Nordbank (receiving bank)

    TARGET2 tells the receiving bank that the funds are on its account at the central bank and are final, with the details of the payment it needs to apply.

  5. 05Posting
    Nordbank books the incoming fundsNordbank (receiving bank)

    Because the interbank leg already settled with finality, Nordbank records the credit on its own ledger without waiting for anything else. The payment is complete end to end.

    • CR Incoming settlement account at Nordbank — EUR 2,000,000.00

What this simplifies: One payment settling gross. Real RTGS operation depends on intraday liquidity management across CLM and RTGS accounts, queue optimisation, and settlement windows across the whole business day.

LEARN THE CONCEPTS BEHIND THIS FLOW

Sources for this flow3
  1. Official requirement

    TARGET Services ↗ — European Central Bank

    Describes the Eurosystem's TARGET Services, including the T2 RTGS system and central liquidity management used to settle euro payments in central bank money. · Checked 2026-07-12

    T2 replaced TARGET2 in March 2023. Detailed user functional specifications are published separately in the ECB's professional-use documents section.

  2. Market practice

    High Value Payments Systems Plus (HVPS+) usage guidelines ↗ — HVPS+ task force (published by Swift)

    Provides the common ISO 20022 usage-guideline base that high-value payment systems such as T2, CHAPS, Fedwire, and CHIPS adapt for their own specifications, supporting interoperability with CBPR+. · Checked 2026-07-12

    Full guidelines are published on MyStandards; content here relies on public summaries.

  3. Simplified educational illustration

    Payments Signal editorial teaching models — Payments Signal

    This site's own simplified teaching models. · Checked 2026-07-12

    What this simplifies: Fictional banks and a single high-value payment; real T2 operation involves many participants, CLM/RTGS account structures, reservations and limits, and operating-hour cut-offs not shown here.

    Used wherever diagrams, scenarios, figures, or example values are didactic constructions rather than sourced facts; every such use carries a simplifications disclosure. All people, companies, banks, and list entries in examples are fictional.