 How the Target Balances Came About: The First Phase of the CrisisChapter Chapter 5 in The Economics of Target Balances, 2020, pp 29-38 from Springer Abstract: Abstract Based on the development of the Target balances, various phases of the euro crisis can be distinguished, beginning with steeply rising balances because of a sudden stop and even reversal of capital flows after the bankruptcy of Lehman Brothers, and ending with further jumps in the Target balances due to unprecedented capital flight from Italy during the Corona crisis. The first of these phases was characterized by over-proportional money lending by the Mediterranean NCBs. Over-proportional money lending was necessitated by capital flight and the need to finance current account deficits, and it was enabled by loose local definitions of collateral for refinancing operations, generous provision of local ELA credit and substantial scope left for local money creation under the ANFA agreement. In general, during this phase, liquidity outflows from a country as measured by the rising Target debt was only possible to the extent that over-proportional local money creation and lending by the respective NCB replenished the local liquidity reservoirs. Keywords: Lehman crisis; Capital flight; Current account deficits; ELA; ANFA (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-030-50170-9_5 Ordering information: This item can be ordered from DOI: 10.1007/978-3-030-50170-9_5 Access Statistics for this chapter More chapters in Springer Books from Springer |
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