For the European economy as a whole, we can anticipate dynamic benefits from T2S exceeding one billion euro per year. 10 In addition, TARGET2 and T2S make use of counterparty risk-free central bank money for settlement, a feature that has become even more beneficial in light of the financial turmoil.
In figure 2, on the right, we see both the ECB’s inflation projections and the marketbased inflation expectations. You can see that both have increased since the beginning of this year, particularly short-term inflation expectations. This means that both the ECB and financial markets expect inflation rates to increase.