 Interpreting TARGET balances in the European Monetary Union: A critical review of the literatureThe North American Journal of Economics and Finance, 2019, vol. 50, issue C Abstract: This is a review article focusing on the most important studies on the role displayed by TARGET balances in the European Monetary Union (EMU). In the context of the public debt financial crisis, large TARGET balances became crucial, reflecting funding stress in the banking systems of most crisis-hit countries. The increase in TARGET balances in this period was triggered by a replacement in these countries of private sector funding of banks by central bank funding. By contrast, the more recent increases in TARGET balances are largely attributable to the implementation of the expanded asset purchase program (EAPP) by the European Central Bank (ECB), also known as a quantitative easing (Qe) monetary policy. Nevertheless, we argue that the persistency of extremely large TARGET imbalances continues to be understood by financial markets as a signal of macroeconomic distress, which should be addressed to solve the underlying tensions among EMU member States. Keywords: European financial crisis; Banking crises; Sovereign debt crisis; TARGET; EMU (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:50:y:2019:i:c:s1062940819300889 DOI: 10.1016/j.najef.2019.101039 Access Statistics for this article The North American Journal of Economics and Finance is currently edited by Hamid Beladi More articles in The North American Journal of Economics and Finance from Elsevier |
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