As you know, the Eurosystem set up a European payments system – TARGET – to ensure the integration of the various money markets and the emergence of a single interbank interest rate. TARGET links all the national large-value payments systems in the EU.
Except for some initial “teething problems” arising from the necessity for commercial banks and central banks to adapt to the new system and environment, TARGET has functioned well overall and has contributed substantially to the rapid integration of the euro money market. No treatment of monetary policy is complete without some remarks on the reverse side of monetary policy: exchange rate policy.