Central Bank Imbalances in the Euro Area

Matthew Higgins and Thomas Klitgaard

No 20111221, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: The euro area sovereign debt crisis sparked an outflow of bank deposits from countries in the periphery to commercial banks in Germany and other core countries. The outflow highlighted a key aspect of the payments system linking national central banks in euro area countries. In particular, net outflows from private commercial banks in a given country are matched by credits to that county’s central bank, with those credits extended by central banks elsewhere in the euro area. In this post, we explain how the credits affected the adjustment pressures faced by countries in the euro area during the ongoing debt crisis.

Keywords: Eurosystem; euro; area; payments (search for similar items in EconPapers)
JEL-codes: F00 G2 (search for similar items in EconPapers)
Date: 2011-12-21
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