Which system do Bulgaria, Croatia, Denmark, Poland, and Romania use for euro transactions?

The correct answer is the TARGET2 system, which is a real-time gross settlement system for euro transactions. TARGET2 is specifically designed for large-value and urgent payments in euros, and it enables efficient interbank payments across Europe. Countries like Bulgaria, Croatia, Denmark, Poland, and Romania, while not fully part of the Eurozone, still participate in euro-denominated transactions and can utilize TARGET2 for this purpose. This system facilitates activities related to monetary policy, as well as financial transactions between Eurozone banks and various institutions, underlining its importance in ensuring stability and liquidity in the euro payment landscape.

In contrast, SEPA (Single Euro Payments Area) also facilitates euro transactions but is primarily focused on standardizing cross-border payments to promote simplicity and efficiency, rather than being a central settlement mechanism. SWIFT is a messaging network used for secure international financial transactions but does not itself settle those transactions. IBAN (International Bank Account Number) is a standard international numbering system for individual bank accounts, which helps to identify bank accounts across borders, but it is not a payment processing system in itself.