I define T2 as the Eurosystem service for settling large-value payments in central bank money. It forms a core part of the TARGET Services landscape. It ensures that euro payments settle safely and efficiently. Therefore, it supports monetary policy, financial stability, and smooth market functioning. Moreover, it replaces the former TARGET2 service with a harmonised and modern setup.
From a functional view, the service consists of two tightly connected components. First, Central Liquidity Management (CLM) manages liquidity centrally for participants. Second, Real-Time Gross Settlement (RTGS) processes individual payments in real time. Consequently, banks control liquidity from one point while settling payments instantly. As a result, transparency and control improve across the system.
The service operates on a gross settlement basis. That means each payment settles individually and immediately. Therefore, settlement risk stays low. In addition, all payments settle in central bank money. This feature removes credit risk between participants. Hence, the service acts as a trusted backbone for the euro area payment system.
From a system analysis perspective, the service shows a clear modular design. Liquidity functions stay separated from payment processing. However, both components interact continuously. This separation simplifies requirements definition. It also supports traceability and testing. Therefore, requirements engineers can model interfaces, data flows, and controls with clarity.
The service also integrates with other TARGET Services. For example, it connects to securities settlement and instant payment services. As a result, liquidity can move seamlessly across services. This interaction requires precise rules, strict timing, and reliable interfaces. Consequently, requirements management plays a critical role in avoiding inconsistencies.
Operationally, the service follows a defined operating schedule. It includes start-of-day, end-of-day, and maintenance windows. Thus, time constraints influence functional and non-functional requirements. In addition, business continuity and resilience shape system design. Therefore, analysts must consider availability, recovery, and fallback scenarios early.
In conclusion, the service is more than a payment engine. It is a complex socio-technical system. It combines business rules, legal constraints, and technical components. For this reason, it serves as an excellent reference system for requirements engineering and system analysis in financial market infrastructures.