AN INTEGRATED FINANCIAL MARKET SOLUTION: TARGET2-LATVIA

Abstract

This paper aims at analysing the role of central banks in enhancing smooth operation of payment systems towards an integrated EU fi nancial infrastructure. The research is based on a number of views regarding the signifi cance of payment systems for the implementation of the central bank’s monetary policy and improvement of the fi nancial market development process. The novelty of this research is the assessment of the launch of TARGET2 in the EU countries, including Latvia. Regarding TARGET2-Latvija, the authors have evaluated its objectives, tasks, legal framework and launching within the fi rst wave of migration to TARGET2, and have conducted the analysis of indicators determining the operation of payment systems. In the context of large value euro payments, the single shared technical platform, uniform legal framework and similar services across the EU are the advantages of TARGET2. Smooth integration into TARGET2 is the basic condition for the convergence of EU12 with the euro area countries in the payment system area.