The implications of TARGET2 in the European balance of payments crisis and beyond
AbstractThe paper provides an account of the meaning and implications of TARGET2 in the eurozone (EZ) balance of payments crisis. In this context, it discusses Hans-Werner Sinn's thesis about a stealth bail-out of the EZ periphery by the ECB from a heterodox perspective. Financial liberalisation, a relatively loose monetary policy and the provisional fading of devaluation risks generated ephemeral growth in some peripheral EZ countries sustained by capital flows from core countries. This has been followed by real exchange rate revaluation and deterioration of foreign accounts. As a result, external financing flows dried up and the previous stock of loans began to be repatriated. TARGET2 has played a fundamental role in avoiding a precipitous crisis. This distinguishes the European crisis from more traditional balance of payments crises. However, the presence of TARGET2 does not offset the absence of the financial crisis prevention and resolution mechanisms that are characteristic of fully fledged political and currency unions.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Edward Elgar in its journal European Journal of Economics and Economic Policies: Intervention.
Volume (Year): 10 (2013)
Issue (Month): 3 ()
Contact details of provider:
Web page: http://www.elgaronline.com/ejeep
European Monetary Union; financial crisis; Germany; neo-mercantilism; balance of payment; capital flows; sudden stops; TARGET2; OMT;
Other versions of this item:
- Sergio Cesaratto, 2013. "The implications of TARGET2 in the European balance of payment crisis and beyond," Department of Economics University of Siena 681, Department of Economics, University of Siena.
- E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Institutional; Evolutionary
- E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
- E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
- F - International Economics
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sergio Cesaratto, 2012.
"The endless eurozone crisis, where do we stand? a classical-kaleckian overview,"
FrancoAngeli Editore, vol. 2012(107), pages 35-63.
- Sergio Cesaratto, 2013. "The endless Eurozone crisis, where do we stand? A Classical-Kaleckian overview," Department of Economics University of Siena 671, Department of Economics, University of Siena.
- Sergio Cesaratto, 2010. "Europe, German Mercantilism and the Current Crisis," Department of Economics University of Siena 595, Department of Economics, University of Siena.
- Sergio Cesaratto, 2007. "Are PAYG and FF Pension Schemes Equivalent Systems? Macroeconomic Considerations in the Light of Alternative Economic Theories," Review of Political Economy, Taylor & Francis Journals, vol. 19(4), pages 449-473.
- Raphael A. Auer, 2013.
"What Drives Target2 Balances? Evidence From a Panel Analysis,"
13.03, Swiss National Bank, Study Center Gerzensee.
- Raphael Anton Auer, 2012. "What Drives Target2 Balances? Evidence From a Panel Analysis," Working Papers 2012-15, Swiss National Bank.
- Raphael A. Auer, 2013. "What Drives Target2 Balances? Evidence from a Panel Analysis," CESifo Working Paper Series 4216, CESifo Group Munich.
- Sergio Cesaratto, 2012. "Controversial and novel features of the Eurozone crisis as a balance of payment crisis," Department of Economics University of Siena 640, Department of Economics, University of Siena.
- Christian Fahrholz & Andreas Freytag, 2012. "Will TARGET2-Balances be Reduced again after an End of the Crisis?," Global Financial Markets Working Paper Series 30-2012, Friedrich-Schiller-University Jena.
- Michael D. Bordo & Harold James, 2013. "The European Crisis in the Context of the History of Previous Financial Crises," NBER Working Papers 19112, National Bureau of Economic Research, Inc.
- Martina Cecioni & Giuseppe Ferrero, 2012. "Determinants of TARGET2 imbalances," Questioni di Economia e Finanza (Occasional Papers) 136, Bank of Italy, Economic Research and International Relations Area.
- Paul Dalziel, 1996. "The Keynesian Multiplier, Liquidity Preference, and Endogenous Money," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 18(3), pages 311-331, April.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Emily Milsom).
If references are entirely missing, you can add them using this form.