Which TARGET for monetary policy in stage three? Issues in the shaping of the European payment system

Which TARGET for Monetary Policy in Stage Three? Issues in the Shaping of the European Payment System. — The paper explores the inter-relationship between payment system arrangements and the conduct of the single monetary policy in Stage Three of EMU against the background of TARGET — the project drafted by the European Monetary Institute with the aim of creating an EU-wide payment system through interlinking national Real-Time Gross Settlement (RTGS) systems. In addition to the issues raised by the coexistence of gross and net settlement arrangements, the spread of RTGS systems is likely to involve an increase in the demand for intraday liquidity. The alternative options available to meet this demand are analyzed, focusing on their monetary policy implications and drawing policy prescriptions.