Will TARGET2-Balances be Reduced again after an End of the Crisis?
This article deals with the macro-economics of the Trans-European Automated Re- al-time Gross Settlement Express Transfer System (TARGET2). Originally, the TARGET2 was in-tended to solely function as a monetary arrangement for liquidity issues. It is shown that the TARGET2 contributes to a substantial misallocation of real resources within the Eurozone (EZ). The discussion highlights that there are no tendencies for rebalancing TARGET2-claims and liabilities, but rather a dynamic towards infinite and prolonged TARGET2-imbalances in the form of hysteresis.
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