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Eco Focus

Eco Focus is an aperiodic publication providing up-to-the-minute analysis of a current topic.

  • ECO Focus - Edition February 6, 2013

    Target2: Received wisdom and real issues

    For the peripheral Eurozone countries, the ECB took the role of the market by providing commercial banks with unlimited liquidities, indirectly contributing to the increase of Target2 imbalances. Explaining the reason behind, we will justify this policy and put into perspective such claims of Central Banks in Northern countries.
  • Content:

    - Target 2 in brief
    - Target 2 and its imbalances
    - Greater imbalances shouldered by

      an accommodative ECB monetary policy
    - The consequences of these imbalances

      on creditors should be put into proper

      perspective
    - Developments

  • Extract - Delayed slowdown of inflation

    With its non-conventional measures (such as its LTROs and easing of collateral eligibility conditions) for injecting unlimited amounts of liquidity, the ECB has taken the place of the interbank (and wholesale) market. This liquidity was then partly used to finance intra-European trade and has accordingly indirectly contributed to the rise in Target 2 imbalances.

    Without this intervention, the activity downturn would have been much more marked, and asset sales and the sharp contraction in lending to offset the drying up of market finance could have plunged the Eurozone into a depressionary spiral, with the recession-credit crunch and deflation sustaining each other.

  • Target2 claims and debts

    Since 2008-2009, Central Banks in the Eurozone's peripheral countries have accumulated debts with the Eurosystem in conjunction with the intra-Eurozone payments and settlements system dubbed Target 2.

    Target2 claims and debts
  • Download publication - (PDF - 443.38 Ko)

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