Will TARGET2-Balances be Reduced again after an End of the Crisis?

Christian Fahrholz and Andreas Freytag ()

No 30-2012, Global Financial Markets Working Paper Series from Friedrich-Schiller-University Jena

Abstract: This article deals with the macro-economics of the Trans-European Automated Re- al-time Gross Settlement Express Transfer System (TARGET2). Originally, the TARGET2 was in-tended to solely function as a monetary arrangement for liquidity issues. It is shown that the TARGET2 contributes to a substantial misallocation of real resources within the Eurozone (EZ). The discussion highlights that there are no tendencies for rebalancing TARGET2-claims and liabilities, but rather a dynamic towards infinite and prolonged TARGET2-imbalances in the form of hysteresis.

Keywords: TARGET2; Eurosystem; ESCB; balance-of-payments (search for similar items in EconPapers)
JEL-codes: E02 E42 E44 E63 H63 (search for similar items in EconPapers)
Date: 2012-05-28
New Economics Papers: this item is included in nep-eec and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:hlj:hljwrp:30-2012

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