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TARGET Balances - An Anchor of Stability

Author

Listed:
  • Marcel Fratzscher
  • Philipp König
  • Claudia Lambert

Abstract

The debate about TARGET2, the payment system of the European System of Central Banks (ESCB), has resulted in controversial discussions in Germany in recent years. The present study by DIW Berlin concludes that fears often expressed in this context of the risks to Germany are largely unfounded. Germany is - in contrast to what is often claimed - one the beneficiaries of the Target system. In particular, the fact that in the course of the crisis, financial risks could easily be reduced thanks to TARGET2 was beneficial for both the German government and private investors. Since the outbreak of the crisis, German investors pulled almost €400 billion euros fromthe crisis countries and they continue to hold around €740 billion in assets there.

Suggested Citation

  • Marcel Fratzscher & Philipp König & Claudia Lambert, 2013. "TARGET Balances - An Anchor of Stability," DIW Economic Bulletin, DIW Berlin, German Institute for Economic Research, vol. 3(11/12), pages 3-11.
    • Handle: RePEc:diw:diwdeb:2013-11-1
    as

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    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.433595.de/diw_econ_bull_2013-11-1.pdf
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    References listed on IDEAS

    as
    1. Peter Burgold & Sebastian Voll, 2012. "Begrenzung von TARGET2-Risiken – ein kritischer Überblick," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 13, pages 103-121, May.
    2. Hans-Werner Sinn, 2013. "Target Losses If The Euro Breaks Up – A Response to De Grauwe and Ji," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 66(01), pages 14-24, January.
    3. Hans-Werner Sinn & Timo Wollmershäuser, 2012. "Target loans, current account balances and capital flows: the ECB’s rescue facility," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(4), pages 468-508, August.
    4. Ulrich Bindseil & Philippine Cour-Thimann & Philipp König, 2012. "Target2 and Cross-border Interbank Payments during the Financial Crisis," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 13(SPECIALIS), pages 83-92, February.
    5. Hans-Werner Sinn & Timo Wollmershäuser, 2011. "Target-Kredite, Leistungsbilanzsalden und Kapitalverkehr: Der Rettungsschirm der EZB," ifo Working Paper Series 105, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    6. Jens Klose & Benjamin Weigert, 2012. "Das Verrechnungssystem der Federal Reserve und seine Übertragbarkeit auf den Euroraum," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 92(4), pages 243-250, April.
    7. Hans-Werner Sinn, 2012. "Die Target-Falle: Gefahren für unser Geld und unsere Kinder," Books, by Staff of the ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 2012001.
    8. Xavier Freixas & Jean-Charles Rochet, 2008. "Microeconomics of Banking, 2nd Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262062704, December.
    9. Ulrich Bindseil & Philippine Cour-Thimann & Philipp König, 2012. "Target2 and Cross-border Interbank Payments during the Financial Crisis," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 13(05), pages 83-92, February.
    10. Hans-Werner Sinn & Timo Wollmershäuser, 2011. "Target-Kredite, Leistungsbilanzsalden und Kapitalverkehr: Der Rettungsschirm der EZB," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 64, pages 01-29, June.
    11. Philippine Cour-Thimann, 2013. "CESifo Forum Special Issue April 2013: Target Balances and the Crisis in the Euro Area," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 0(1), pages 05-50, May.
    12. Hans-Werner Sinn, 2012. "Die Target-Falle: Gefahren für unser Geld und unsere Kinder," Books, by Staff of the ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 201210, April.
    13. PhilippineCour-Thimann, 2013. "CESifo Forum Special Issue April 2013: Target Balances and the Crisis in the Euro Area," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 0, pages 05-50, May.
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    More about this item

    Keywords

    TARGET2; central bank liquidity; euro area crisis; capital flight;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G1 - Financial Economics - - General Financial Markets
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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