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Notes on the Role of TARGET in a Stage III Crisis

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  • Peter M. Garber

Abstract

When Stage III of EMU begins on January 1, 1999, member countries will irrevocably lock exchange rates, and interbank payments in euros will commence. Will the ensuing respite from Stage II instabilities be permanent or only the eye of the storm? Can Stage III itself be subject to an attack that forces a realignment of the of the system? The key question for this paper is how the infrastructural arrangements designed to underpin the monetary union will emerge to determine capital flow dynamics in a crisis and accentuate potential cross-border flows. The answer lies in the details of the TARGET payment system, which can provide the inter-central bank credit necessary to fund an attack.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6619.

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Date of creation: Jun 1998
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Publication status: published as Garber, Peter M. "The TARGET Mechanism: Will It Propagate Or Stifle A Stage III Crisis?," Carnegic-Rochester Conference Series on Public PolicyP, 1999, v51(1,Dec), 195-220.
Handle: RePEc:nbr:nberwo:6619

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  1. Michael G. Spencer & Peter M. Garber, 1992. "The Dissolution of the Austro-Hungarian Empire," IMF Working Papers 92/66, International Monetary Fund.
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Cited by:
  1. Sinn, Hans-Werner & Wollmershäuser, Timo, 2012. "Target loans, current account balances and capital flows: The ECB’s rescue facility," Munich Reprints in Economics 19556, University of Munich, Department of Economics.
  2. Peter B. Kenen, 2000. "Comment on "Is Launching the Euro Unstable in the Endgame?"," NBER Chapters, in: Currency Crises, pages 177-181 National Bureau of Economic Research, Inc.
  3. Raphael A. Auer, 2013. "What Drives Target2 Balances? Evidence From a Panel Analysis," Working Papers 13.03, Swiss National Bank, Study Center Gerzensee.
  4. Thomas Mayer & Jochen Möbert & Christian Weistroffer, 2012. "Macroeconomic Imbalances in EMU and the Eurosystem," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 13(SPECIALIS), pages 35-42, 02.
  5. Freixas, Xavier & Parigi, Bruno M & Rochet, Jean-Charles, 2000. "Systemic Risk, Interbank Relations, and Liquidity Provision by the Central Bank," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 32(3), pages 611-38, August.
  6. Barry Eichengreen, 2010. "The Breakup of the Euro Area," NBER Chapters, in: Europe and the Euro, pages 11-51 National Bureau of Economic Research, Inc.
  7. Aaron Tornell & Frank Westermann, 2012. "Greece: The Sudden Stop That Wasn’t," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 13(SPECIALIS), pages 102-103, 02.
  8. Sergio Cesaratto, 2013. "The implications of TARGET2 in the European balance of payments crisis and beyond," European Journal of Economics and Economic Policies: Intervention, Edward Elgar, vol. 10(3), pages 359—.
  9. Pisani-Ferry, Jean, 2013. "The known unknowns and unknown unknowns of European Monetary Union," Journal of International Money and Finance, Elsevier, vol. 34(C), pages 6-14.
  10. Rosati, Simonetta & Secola, Stefania, 2005. "Explaining cross-border large-value payment flows: evidence from TARGET and EURO 1 data," Working Paper Series 0443, European Central Bank.
  11. Wolf, Marvin, 2013. "Währungsunionen und Allmendeproblem," Hannover Economic Papers (HEP) dp-521, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
  12. Thomas Mayer & Jochen Möbert & Christian Weistroffer, 2011. "Makroökonomische Ungleichgewichte in der EWU und das Eurosystem," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 64(16), pages 31-38, 09.

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