What is one of the features of Target2?

Target2 is the real-time gross settlement (RTGS) system owned and operated by the Eurosystem, which facilitates the processing of euro payments in the European Union. One of its defining features is that it enables payments to settle with immediate finality. This means that once a payment is processed within Target2, it is irrevocable and cannot be altered or reversed, ensuring certainty and efficiency in transactions. Immediate finality is crucial for settling large-value transactions quickly and securely, which supports liquidity management and reduces settlement risk for financial institutions.

The other options do not accurately depict the features of Target2. For instance, it does not operate using cryptocurrencies, which are decentralized digital currencies not governed by any central authority. While Target2 does allow for some level of deferred payment arrangements, this is not a primary feature; its core functionality emphasizes real-time settlements. Lastly, Target2 is designed for cross-border euro transactions within the European Union, so it is not exclusive to domestic transactions. This international capability is essential for facilitating commerce and economic integration within the euro area.