The Target Balances in the Euro Area.pdf

The Target Balances in the Euro Area

Sebastian Lechner

Seminar paper from the year 2012 in the subject Economics - Monetary theory and policy, grade: 1,3, University of Bayreuth, language: English, abstract: The European Monetary Union is stuck in a severe balance-of-payments imbalance. The European sovereign debt crisis, which followed the financial crisis, is present in the media, in politics and important economists try to evaluate the situation, in order to find possible solutions.
This paper deals with the TARGET balances. TARGET2 is a payment system in the European Monetary Union, and, as will be shown, the TARGET balances are a measure for the balance- of-payment deficits and surpluses in the countries of the Eurozone. The issue is interesting as there are huge differences in the current account balances of member states. To understand the emergence of the TARGET balances , it is important to first look at the way a central bank creates money. This paper aims to show how TARGET balances arise when trade flows are not financed through inverse capital flows. Further on, it examines the current account deficits of Greece, Ireland, Italy, Portugal and Spain and shows how they led to tremendous TARGET2 debts of those countries. On the other hand it examines, how particularly Germany, to a smaller extend also Finland, Luxembourg and the Netherlands accumulated high TARGET2 claims towards the Eurosystem. Further on, it examines the development of the monetary bases in the Eurozone and how this affected Bundesbank money creation.
Finally, it deals with some concerns regarding the TARGET balances . As it is a complex matter, opinions about their risk diverge. Some analysts think that they are highly problematic, others dont see any risk at all. Some main ideas dealing with the risk involved will be presented in brief.

Current account balance of euro area countries. in % of GDP. 32654.png. Note: Sum of Q1 to Q3. Sources: Eurostat; Cologne Institute for Economic Research. 1 Apr 2018 ... Anyway, before the sovereign debt crisis, the sum of all claims on the balance sheets of euro area NCBs stood very low, at around 100 €/b prior to ...

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The Target Balances in the Euro Area.pdf

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Sofia Voigt

30.11.2011 · Huge balance-of-payment surpluses and deficits (Target balances) accumulated between the euro countries because the European Central Bank (ECB) allowed those countries in balance-of-payment difficulties to solve their problems by disproportionately increasing their national money supply.

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All of this is to say that Target2 balances can be informative about conditions in the euro area if you view them from the perspective of the balance of payments. They reflect the interaction The Target Balances in the Euro Area: Amazon.de: Sebastian ...

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the increase in target balances in the euro area since 2015 The authors of this article are Pana Alves, Antonio Millaruelo and Ana del Río of the Directorate General …

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Downloadable! This paper examines how membership of a monetary union affects macroeconomic adjustment of Euro Area countries to sudden stops.We focus on a key difference between a standard peg and a monetary union: the availability of external financing from the common centralbank via the TARGET system. For this purpose, we use a modified version of … This section sets out the individual figures for the claims and liabilities of euro area national central banks (NCBs) vis-à-vis the ECB arising from cross-border ...

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The Target Balances in the Euro Area - Sebastian Lechner - Term Paper - Economics - Monetary theory and policy - Publish your bachelor's or master's thesis, dissertation, term paper or essay Capital flows in the euro area and TARGET2 balances