"The only effect of denying or restricting intra-day liquidity ... would be to increase somewhat the cost of using Target, and so to encourage the use of alternative, less secure, payments arrangements, such as correspondent banking arrangements or the private sector euro net settlement system," Mr George said in the Gilbart Lecture in London.
"I would hope that we will be able to resolve the issue through the ongoing technical dialogue in the European Monetary Institute as we have resolved other issues in the past," he said.
Mr George added that while the introduction of real-time gross settlement in April had eliminated credit risk between banks, more work was needed to reduce risk in securities settlement and foreign exchange settlement, known as Herstatt risk.
"We are still some way from achieving final delivery versus payments in relation to domestic securities; and we have made very little progress up to this point in addressing Herstatt risk," Mr George said.
"In a world of increasingly interdependent financial markets, it is no time to rest on our laurels," he added.
The growth in average daily traffic in large sterling payments has been phenomenal. It currently runs at pounds 120bn compared with pounds 40bn a decade ago.
The Gilbart annual lecture has been taking place since 1872 and is named after James William Gilbart, the first general manager of the London and Westminster Bank. The lecture is hosted by King's College in London and the Chartered Institute of Bankers.Reuse content