Euro payment systems BIS Review 16/1999  –4–  A common monetary policy in the euro area is contingent on cross-border payments in euros taking place just as rapidly and efficiently as payments in national systems do today. All countries participating in EMU are therefore linked to a common payment system, TARGET. In addition to being a channel for monetary policy, TARGET is, however, designed to enhance the efficiency and reliability of cross-border payment systems. TARGET is therefore used for settling both monetary policy and commercial transactions. EU countries outside the euro area are also linked to the system. Payment settlements using TARGET take place on a real-time gross basis. This means that transactions are settled individually and with finality throughout the day. The system is also used to settle net positions generated through netting of gross positions between banks. The TARGET system consists of the national settlement systems linked together into a communications network called Interlink. Payments are transferred from one country to another via the settlement system of the payer country, where the central bank debits the payer bank’s account and credits an account of the central bank of the beneficiary country. In turn, the central bank of the beneficiary country credits the recipient bank. There are several alternative systems for making cross-border payments in euros. The most important are probably the Euro Banking Association (EBA) clearing system and the traditional network of correspondent banks.
Rachel Lomax: Global financial imbalances Remarks by Ms Rachel Lomax, Deputy Governor of the Bank of England, at the Chatham House conference on Global Financial Imbalances, London, 24 January 2006. *  *  *  One spin off from the debate about global imbalances has been renewed interest in the international monetary system. It is a benign aspect of a potentially acrimonious debate about whether the scale and persistence of global imbalances – and specifically the US current account deficit – was made in the USA or made in Asia – or conceivably Europe (and maybe even the Middle East). A better approach is to view global imbalances as the outcome of decentralised savings-investment decisions within an interdependent global system. And it’s worth emphasising straight away that substantial imbalances may be the natural product of a healthy global monetary and financial system: they do not necessarily represent a problem. But is the current pattern of large and persistent global imbalances healthy in this sense? Or does it reflect unsustainable behaviour on the part of policy makers, companies or private individuals around the world, rooted in unrealistic expectations, sub optimal economic policies or tensions between national policy objectives? Are global imbalances now on such a scale that their reduction inevitably poses a threat of some kind, whether to global activity, trade or financial stability? And does the current international monetary system embody sufficient incentives to deliver an orderly correction of imbalances?