ECB Glitch Reduced Bank Deposits by More Than 400 Billion Euros

A glitch in the European Central Banks system for settling large-value payments by commercial and central banks has resulted in a drop in deposits worth more than 400 billion euros ($473 billions).

The cash remained in banks current accounts, and the balances have since returned to normal. Still, the incident highlights the critical role of the payments infrastructure for the euro area, and the risks that could be posed from a longer outage.

The ECB said the disruption “was due to the technical issues with TARGET2 on Friday, which led to difficulties for banks and central banks to settle and determine the account balance.”

Target2 is used to process more than 2 billion euros of transactions per minute. A long-enough halt to that flow of liquidity would start to have real-world effects very quickly.