Target Loans, Current Account Balances and Capital Flows: The ECB’s Rescue Facility

Hans-Werner Sinn and Timo Wollmershäuser

No 3500, CESifo Working Paper Series from CESifo

Abstract: The European Monetary Union is stuck in a severe balance of payments crisis. Greece, Ireland, Portugal and Spain in particular have suffered from balance of payment deficits whose accumulated value, as measured by the Target balances in the national central banks’ balance sheets, was 314 billion euros in March 2011. The national central banks of these countries covered the deficits by creating and lending out additional central bank money that flowed to the euro core countries, Germany in particular, and crowded out the central bank money resulting from local refinancing operations. Thus the ECB forced a public capital flow from the core countries to the peripheral countries that partly compensated for the now reluctant private capital flows.

Keywords: currency union; balance of payments; bailout; payment system. (search for similar items in EconPapers)
JEL-codes: E50 E58 E63 F32 F34 (search for similar items in EconPapers)
Date: 2011
References: Add references at CitEc
Citations: View citations in EconPapers (136)

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp3500.pdf (application/pdf)

Related works:
Journal Article: Target loans, current account balances and capital flows: the ECB’s rescue facility (2012)
Working Paper: Target loans, current account balances and capital flows: The ECB’s rescue facility (2012)
Working Paper: Target Loans, Current Account Balances and Capital Flows: The ECB's Rescue Facility (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_3500

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().