What Germany should fear most is its own fear: An analysis of Target2 and current account imbalances
This paper analyzes two claims that have been made about the Target2 payment system. The first one is that this system has been used to support unsustainable current account deficits of Southern European countries. The second one is that the large accumulation of Target2 claims by the Bundesbank represents an unacceptable risk for Germany if the eurozone were to break up. We argue that these claims are unfounded. They also lead to unnecessary fears in Germany that make a solution of the eurozone crisis more difficult. Ultimately, this fear increases the risk of a break-up of the eurozone. Or to paraphrase Franklin Roosevelt, what Germany should fear most is simply its own fear.
|Date of creation:||Sep 2012|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (+322) 229-39-11
Fax: (+322) 229-39-71
Web page: http://www.ceps.eu
More information through EDIRC
References listed on IDEAS
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.:
- Buiter, Willem H., 2008. "Can Central Banks Go Broke?," CEPR Discussion Papers 6827, C.E.P.R. Discussion Papers.
- Ulrich Bindseil & Philipp Johann KÃ¶nig, 2011. "The economics of TARGET2 balances," SFB 649 Discussion Papers SFB649DP2011-035, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
- Hans-Werner Sinn & Timo Wollmershaeuser, 2011.
"Target Loans, Current Account Balances and Capital Flows: The ECB's Rescue Facility,"
NBER Working Papers
17626, National Bureau of Economic Research, Inc.
- 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, vol. 19(4), pages 468-508, August.
- Hans-Werner Sinn & Timo Wollmershäuser, 2011. "Target Loans, Current Account Balances and Capital Flows: The ECB’s Rescue Facility," CESifo Working Paper Series 3500, CESifo Group Munich.
- 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.
- Westermann, Frank & Steinkamp, Sven, 2013.
"On Creditor Seniority and Sovereign Bond Prices in Europe,"
Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order
79848, Verein für Socialpolitik / German Economic Association.
- Sven Steinkamp & Frank Westermann, 2012. "On Creditor Seniority and Sovereign Bond Prices in Europe," Working Papers 92, Institute of Empirical Economic Research.
- Sven Steinkamp & Frank Westermann, 2012. "On Creditor Seniority and Sovereign Bond Prices in Europe," CESifo Working Paper Series 3944, CESifo Group Munich.
- ,, 2009. "Economics of Monetary Union," OUP Catalogue, Oxford University Press, edition 8, number 9780199563234, March.
When requesting a correction, please mention this item's handle: RePEc:eps:cepswp:7280. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Margarita Minkova)
If references are entirely missing, you can add them using this form.