Speculative Eurozone Attacks and Departure Strategies

Stefan Homburg

Hannover Economic Papers (HEP) from Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät

Abstract: This paper shows that the eurozone payment system does not effectively protect member states from speculative attacks. Suspicion of a departure from the common currency induces a terminal outflow of central bank money in weaker member states. TARGET2 cannot inhibit this drain but only protects central bank assets. Evidence presented here suggests that a run on Italy is already on the way. The paper also considers departure strategies of strong and weak member states and the distributive effects of an orderly eurozone dissolution.

Keywords: Currency speculation; TARGET2; eurozone; Italexit; Dexit; trilemma (search for similar items in EconPapers)
JEL-codes: E52 E58 F45 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2018-10
New Economics Papers: this item is included in nep-cba, nep-eec, nep-mac, nep-mon and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://diskussionspapiere.wiwi.uni-hannover.de/pdf_bib/dp-640.pdf (application/pdf)

Related works:
Journal Article: Speculative Eurozone Attacks and Departure Strategies (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:han:dpaper:dp-640

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