The Target Credit

Hans-Werner Sinn

Chapter Chapter 2 in The Economics of Target Balances, 2020, pp 9-16 from Springer

Abstract: Abstract Among a variety of potential private and public ways of creating an international payment system for its new currency, the Eurozone chose a public solution without the NCBs’ sustaining paid-in accounts. Payment orders from one NCB to another as recorded in the Target balances create open, uncollateralized credit positions that are in fact overdraft credit. There is no limit to this overdraft credit and no settlement mechanism. The latter distinguishes the Target balances from the corresponding (ISA) balances between the branches of the US Federal Reserve System, which are settled annually.

Keywords: Overdraft facility; Eurosystem; Federal Reserve System; Collateral; Maastricht Treaty (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/978-3-030-50170-9_2

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