Liquidity usage in TARGET2

Real-time gross settlement (RTGS) systems typically require large amounts of liquidity to support the settlement of payments on a gross basis. At the same time, settling on a gross basis benefits the payment system by reducing credit risk and, more generally, systemic risk. For these reasons, TARGET2, the Eurosystem's RTGS system that processes euro-denominated payments in central bank money, also settles payments on a gross basis. To enable participants to optimise the use of liquidity and reduce their liquidity needs, TARGET2 offers a number of features, called liquidity-saving mechanisms. In addition, when liquidity on their accounts is not sufficient, TARGET2 participants can make use of the intraday credit line (ICL) facility, which is offered by the Eurosystem against eligible collateral and is interest free.