TARGET2 (Trans-European Automated Real-time Gross settlement Express Transfer System 2) is the Eurosystem’s payment system for the real-time gross settlement of national and cross-border transactions in euro.
TARGET2 balances, which are recorded as intra-Eurosystem balances in euro area NCBs’ balance sheets, arise from this decentralized cross-border distribution of central bank money. If Eurosystem monetary policy operations were not executed in a decentralized manner via the NCBs but centrally via the ECB, there would be no TARGET2 balances. The OeNB’s TARGET2 liabilities, which have been accumulating continuously since the start of monetary union, ran to roughly EUR 45.4 billion at the end of 2018, which means that more euro bank money has been transferred via TARGET2 (and its predecessor TARGET) from Austria to other countries than from other countries to Austria. Austria’s TARGET2 liabilities result from structural inflows of euro cash which leave Austria as noncash flows via TARGET2. Unlike in some euro area countries, they do not result from the financial crisis. This inflow of euro cash can be attributed in part to tourism, but mainly to the physical shipment of euro banknotes into Austria from countries outside the euro area.