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Bundesbank Holds Almost 1,000 Billion in Target Claims: What Lies Behind Them?

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  • Hans-Werner Sinn

Abstract

The Bundesbank’s Target balance has been rising for a decade and has now reached around a billion euros. Cyclically the value of these claims has increased from around 70 billion euros at the end of 2007 to 976 billion euros at the end of June 2018. Hans-Werner Sinn sees Target as a system that facilitates unlimited overdraft credit and that cannot survive because it is out of sync with the scarcity of resources in reality. It will inevitably lead to an overstretching of the claims until the system collapses for economic or political reasons. In his article Hans-Werner Sinn discusses several options that could be implemented individually or together to avoid this outcome. All of these options would uncover the opposing interests of Germany, international investors and the debtor countries, but the options need to be discussed openly.

Suggested Citation

  • Hans-Werner Sinn, 2018. "Bundesbank Holds Almost 1,000 Billion in Target Claims: What Lies Behind Them?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 71(14), pages 26-37, July.
    • Handle: RePEc:ces:ifosdt:v:71:y:2018:i:14:p:26-37
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    Citations

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    Cited by:

    1. Eger, Thomas & Weise, Peter, 2020. "Die Target-Salden in der Eurozone: "Falle" oder Scheinproblem?," Discussion Papers 1/20, Europa-Kolleg Hamburg, Institute for European Integration.
    2. Sinn Hans-Werner, 2019. "Der Streit um die Targetsalden : Kommentar zu Martin Hellwigs Artikel „Target-Falle oder Empörungsfalle?“," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 20(3), pages 170-217, September.
    3. van Suntum, Ulrich, 2018. "The truth on Target II," CAWM Discussion Papers 104, University of Münster, Münster Center for Economic Policy (MEP).
    4. Nicole Storp & Tobias Kordsmeyer, 2019. "Time series analysis of the Deutsche Bundesbank’s Target claims and possible connections to the ECB’s expansionary monetary policy," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 72(06), pages 26-28, March.
    5. Krahnen, Jan Pieter, 2018. "Über Scheinriesen: Was TARGET-Salden tatsächlich bedeuten. Eine finanzökonomische Überprüfung," SAFE White Paper Series 56, Leibniz Institute for Financial Research SAFE.

    More about this item

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems

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