WHICH TARGET FOR MONETARY-POLICY IN STAGE-3 - ISSUES IN THE SHAPING OF THE EUROPEAN PAYMENT SYSTEM

The paper explores the inter-relationship between payment system arran gements and the conduct of the single monetary policy in Stage Three o f EMU against the background of TARGET - the project drafted by the Eu ropean 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 alte rnative options available to meet this demand are analyzed, focusing o n their monetary policy implications and drawing policy prescriptions.