With the exception of architect Sir Richard Rogers, the builders of complicated structures tend not to put internal workings on public display. So it is with European economic and monetary union. While the broader economic aspects of Emu, such as the precise interpretation of the Maastricht criteria, have been the subject of endless debate, the mechanisms for making payments in euro have tended only to be discussed by technical experts. But the deal struck on the transfer system, Target, will fundamentally affect the way Europe's financial markets operate.
Target is the Trans-European Real-time Gross Express Transfer system. It is the conduit by which interbank payments in euro will be made. It will consist of local components in each financial centre, plus an overarching network of central banks. The local components will be similar to existing payment systems, which settle across the books of their local central banks, while the central banks will deal with payments that go from one financial centre to another. Thus, a payment from Société Générale in Paris to Deutsche Bank Frankfurt would have three stages: a payment from SocGen to the Banque de France, one from that central bank to the Bundesbank and one from the Bundesbank to Deutsche.