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TARGET2 balances and the adjustment of capital flows in the Euro area

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  • Timmer , Yannick

    (Trinity College Dublin and IIIS, Ireland)

Abstract

TARGET2 balances emerged from sudden stops in banking capital flows. The turnaround of the balances cannot be assigned to one particularly mechanism. Germany’s commercial banks withdrew their excess liquidity from the Bundesbank and paid back their liabilities against other banks which they had built up during the crisis. Greece and Portugal substituted their TARGET2 balances by bailouts, and Spain as well as Italy attracted most of their net capital inflows privately.

Suggested Citation

  • Timmer , Yannick, 2015. "TARGET2 balances and the adjustment of capital flows in the Euro area," European Economic Letters, European Economics Letters Group, vol. 4(1), pages 15-19.
    • Handle: RePEc:ris:eueclt:0035
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    More about this item

    Keywords

    Balance of Payments; TARGET2; Capital Flows; Euro Area;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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